An investment project has annual cash inflows of $4,200, $5,300, $6,100, and $7,
ID: 2651682 • Letter: A
Question
An investment project has annual cash inflows of $4,200, $5,300, $6,100, and $7,400, and a discount rate of 14 percent. If the initial cost is $7,000, the discounted payback period for these cash flows is ________ years. If the initial cost is $10,000, the discounted payback period for these cash flows is_______years. If the initial cost is $13,000, the discounted payback period for these cash flows is_______years. (Round your answers to 2 decimal places. (e.g., 32.16))
An investment project has annual cash inflows of $4,200, $5,300, $6,100, and $7,400, and a discount rate of 14 percent. If the initial cost is $7,000, the discounted payback period for these cash flows is ________ years. If the initial cost is $10,000, the discounted payback period for these cash flows is_______years. If the initial cost is $13,000, the discounted payback period for these cash flows is_______years. (Round your answers to 2 decimal places. (e.g., 32.16))
Explanation / Answer
discounted payback period = A+(B/C)
A=Year up to which discounted cash flow is negative
B=Cummulative Discounted cash flow up to above year in A
C=Discounted cash flow of year succeding YearIN A
case-1 initial investment= $ 7000
Payback period = 1 + 3315.80/4078.19
= 1+.81
= 1.81 years
case 2 =initial investment = $ 10,000
payback period = 2 + 2237.61/4117.32
= 2+.54
= 2.54 years
case 3 Initial investment =$ 13000
pay back period = 3 +1120.29/4381.39
= 3+ .26
= 3.26 years
year present value @14% cash flow Discounted cash flow cummulative discounted cash flow 0 1 (7000) (7000) (7000) 1 .87719 4200 3684.20 (3315.80) 2 .76947 5300 4078.19 3 .67497 6100 4117.32 4 .59208 7400 4381.39Related Questions
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