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Compute the discounted payback statistic for Project C if the appropriate cost of capital is 8...

Compute the discounted payback statistic for Project C if the appropriate cost of capital is 8 percent and the maximum allowable discounted payback period is three years. (Do not round intermediate calculations and round your final answer to 2 decimal places.) Project C Time: 0 1 2 3 4 5 Cash flow: –$2,200 $960 $840 $880 $540 $340

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Ans 2.85 years

Year Project Cash Flows (i) DF@ 8% (ii) PV of Project A ( (i) * (ii) ) Cumulative Cash Flow
0 -2200 1                             (2,200.00)                (2,200.00)
1 960 0.926                                  888.89                (1,311.11)
2 840 0.857                                  720.16                   (590.95)
3 880 0.794                                  698.57                     107.63
4 540 0.735                                  396.92                     504.54
5 340 0.681                                  231.40                     735.94
NPV                                  735.94
Discounted Payback Period = 2 years + 590.95 / 698.57
2.85 years

jeff jeffy answered 1 year ago
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