Question
In: Finance
You are considering a project with the following cash flows: YEAR PROJECT CASH FLOW ...
You are considering a project with the following cash flows:
YEAR PROJECT CASH FLOW
0 -60,000
1 25,000
2 25,000
3 25,000
4 25,000
If the appropriate discount rate is 11 percent, what is the project's discounted payback period in years?
Solutions
Expert Solution
Ans 2.94 years
| Year | Project Cash Flows (i) | DF@ 11% (ii) | PV of Project A ( (i) * (ii) ) | Cumulative Cash Flow | |
| 0 | -60000 | 1 | (60,000.00) | (60,000.00) | |
| 1 | 25000 | 0.901 | 22,522.52 | (37,477.48) | |
| 2 | 25000 | 0.812 | 20,290.56 | (17,186.92) | |
| 3 | 25000 | 0.731 | 18,279.78 | 1,092.87 | |
| 4 | 25000 | 0.659 | 16,468.27 | 17,561.14 | |
| 17,561.14 | |||||
| Discounted Payback Period = | 2 years + 17186.992/18279.78 | ||||
| 2.94 years | |||||
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