An investment project has annual cash inflows of $4,392, $3,276, $4,222, and $3,268 for the next...

An investment project has annual cash inflows of $4,392, $3,276, $4,222, and $3,268 for the next four years, respectively, and a discount rate of 15%.

What is the discounted payback if the initial investment is $5,500? (Round answer to 2 decimal places. Do not round intermediate calculations)

Expert Solution

Initial investment = $5,500

Payback period is the time period required to cover the initial investment back. Discounted payback period takes in to account the time value of money of future cash inflows.

Time	Cash inflows(in $)	PVF_(15%,n)	PV of cash inflows(in $)	Cumulative value of cash inflow(in $)
1	4392	0.870	3821.04	3821.04
2	3276	0.756	2476.656	6297.696
3	4222	0.658	2778.076	9075.772
4	3268	0.572	1869.296	10945.068

Note : It is assumed that all the cash flows are evenly distributed through out the year.

Discounted payback period = 1 + 1678.96 / 2476.656

( As the initial investment is $5500, we need to cover this cost, we will take year corresponding to the cumulative value which is less than or equal to 5500, here it is 1 year. In 1 year 3821.04 $ will be covered, we will be needing $1678.96 (5500 - 3821.04) more to cover full initial cost. As the cash flows are evenly distributed, remaining 1678.96 $ will be covered from 2nd year inflows of amount 2476.656$) . Hence 1678.96 / 2476.656 is taken.

= 1 + 0.68 (approx)

= 1.68 years (approx)

Hope it helps!

jeff jeffy answered 2 years ago

An investment project has annual cash inflows of $5,100, $3,200, $4,400, and $3,600, for the next...

An investment project has annual cash inflows of $5,100, $3,200, $4,400, and $3,600, for the next four years, respectively. The discount rate is 15 percent. What is the discounted payback period for these cash flows if the initial cost is $5,000? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Discounted payback period years What is the discounted payback period for these cash flows if the initial cost is $7,100? (Do...

An investment project has annual cash inflows of $2,800, $3,700, $5,100, and $4,300, for the next...

An investment project has annual cash inflows of $2,800, $3,700, $5,100, and $4,300, for the next four years, respectively. The discount rate is 11 percent. What is the discounted payback period for these cash flows if the initial cost is $5,200? How would I do this with the calculator?

An investment project has annual cash inflows of $3,700, $4,600, $5,800, and $5,000, for the next...

An investment project has annual cash inflows of $3,700, $4,600, $5,800, and $5,000, for the next four years, respectively. The discount rate is 13 percent. What is the discounted payback period for these cash flows if the initial cost is $6,400? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Discounted payback period ______ years What is the discounted payback period for these cash flows if the initial cost is $8,500? (Do not round...

An investment project has annual cash inflows of $3,600, $4,500, $5,700, and $4,900, for the next...

An investment project has annual cash inflows of $3,600, $4,500, $5,700, and $4,900, for the next four years, respectively. The discount rate is 15 percent. What is the discounted payback period for these cash flows if the initial cost is $6,300? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Discounted payback period years What is the discounted payback period for these cash flows if the initial cost is $8,400? (Do...

An investment project has annual cash inflows of $5,300, $6,400, $7,200 for the next four years,...

An investment project has annual cash inflows of $5,300, $6,400, $7,200 for the next four years, respectively, and $8,500, and a discount rate of 20 percent. What is the discounted payback period for these cash flows if the initial cost is $8,000?

An investment project has annual cash inflows of $4,200, $5,300, $6,100, and $7,400, and a discount...

An investment project has annual cash inflows of $4,200, $5,300, $6,100, and $7,400, and a discount rate of 14%. What is the discounted payback period for these cash flows if the initial cost is $7,000? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Discounted payback period years What is the discounted payback period for these cash flows if the initial cost is $10,000? (Do not round intermediate calculations. Round the final answer to 2...

An investment project has annual cash inflows of $5,800, $6,100, $6,900, and $8,200, and a discount...

An investment project has annual cash inflows of $5,800, $6,100, $6,900, and $8,200, and a discount rate of 14%. What is the discounted payback period for these cash flows if the initial cost is $8,100? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Discounted payback period years What is the discounted payback period for these cash flows if the initial cost is $11,610? (Do not round intermediate calculations. Round the final answer to 2...

An investment project has annual cash inflows of $3,500, $4,400, $5,600, and $4,800, and a discount...

An investment project has annual cash inflows of $3,500, $4,400, $5,600, and $4,800, and a discount rate of 14 percent. What is the discounted payback period for these cash flows if the initial cost is $6,200? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Discounted payback period years What is the discounted payback period for these cash flows if the initial cost is $8,300? (Do not round intermediate calculations and...

An investment project has annual cash inflows of $8,800, $7,900, $8,200, and $8,600, and a discount...

An investment project has annual cash inflows of $8,800, $7,900, $8,200, and $8,600, and a discount rate of 13 percent. If the initial cost is $24,400, the discounted payback period for these cash flows is_____ years. (Round your answer to 2 decimal places. (e.g., 32.16))

An investment project has annual cash inflows of $3,700, $4,600, $5,800, and $5,000, and a discount...

An investment project has annual cash inflows of $3,700, $4,600, $5,800, and $5,000, and a discount rate of 13 percent. a. What is the discounted payback period for these cash flows if the initial cost is $6,400? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the discounted payback period for these cash flows if the initial cost is $8,500? (Do not round intermediate calculations and round your answer to 2...

Question