Discounted payback: Carmen Electronics bought new machinery for $5 million. This

Question

Discounted payback: Carmen Electronics bought new machinery for $5 million. This is expected to result in additional cash flows of $1.2 million over the next seven years. The firm's cost of capital is 12 percent. What is the discounted payback period for this project? If the firm's acceptance period is five years, will this project be accepted?

A 5.4 years; no B 6.1 years; no C 4.6 years; yes D 4.2 years; yes A 5.4 years; no B 6.1 years; no C 4.6 years; yes D 4.2 years; yes Discounted payback: Carmen Electronics bought new machinery for $5 million. This is expected to result in additional cash flows of $1.2 million over the next seven years. The firm's cost of capital is 12 percent. What is the discounted payback period for this project? If the firm's acceptance period is five years, will this project be accepted?

A 5.4 years; no B 6.1 years; no C 4.6 years; yes D 4.2 years; yes

Explanation / Answer

6.1 years; no

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