An investment project has annual cash inflows of $4,200, $5,100, $6,300, and $5,

Question

An investment project has annual cash inflows of $4,200, $5,100, $6,300, and $5,500, and a discount rate of 15 percent.

What is the discounted payback period for these cash flows if the initial cost is $6,900?

What is the discounted payback period for these cash flows if the initial cost is $9,000?

What is the discounted payback period for these cash flows if the initial cost is $12,000?

An investment project has annual cash inflows of $4,200, $5,100, $6,300, and $5,500, and a discount rate of 15 percent.

Explanation / Answer

Working

What is the discounted payback period for these cash flows if the initial cost is $6,900?

Discounted payback period for these cash flows if the initial cost is $6,900 = 2 - (7508.51 - 6900)/3856.33

Discounted payback period for these cash flows if the initial cost is $6,900 = 1.84 Years

What is the discounted payback period for these cash flows if the initial cost is $9,000?

Discounted payback period for these cash flows if the initial cost is $9,000 = 3 - (11650.86 - 9000)/4142.35

Discounted payback period for these cash flows if the initial cost is $9,000 = 2.36 Years

What is the discounted payback period for these cash flows if the initial cost is $12,000?

Discounted payback period for these cash flows if the initial cost is $12,000 = 4 - (14795.5 - 12000)/3144.64

Discounted payback period for these cash flows if the initial cost is $12,000 =3.11 Years

Year Cash flow PV Factor @ 15% Present Value Cumulative 1 4200 0.8695652                3,652.17                3,652.17 2 5100 0.7561437                3,856.33                7,508.51 3 6300 0.6575162                4,142.35              11,650.86 4 5500 0.5717532                3,144.64              14,795.50

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