7. An investment project has annual cash inflows of $4,600, $5,700, $6,500, and

Question

7. An investment project has annual cash inflows of $4,600, $5,700, $6,500, and $7,800, and a discount rate of 13 percent.   
Required:
What is the discounted payback period for these cash flows if the initial cost is $8,000? (Do not round your intermediate calculations.)
rev: 09_18_2012 2.63 years 1.38 years 3.76 years 0.88 years 1.88 years

7. 7. An investment project has annual cash inflows of $4,600, $5,700, $6,500, and $7,800, and a discount rate of 13 percent.   
Required:
What is the discounted payback period for these cash flows if the initial cost is $8,000? (Do not round your intermediate calculations.)
rev: 09_18_2012 2.63 years 1.38 years 3.76 years 0.88 years 1.88 years

An investment project has annual cash inflows of $4,600, $5,700, $6,500, and $7,800, and a discount rate of 13 percent.   
Required:
What is the discounted payback period for these cash flows if the initial cost is $8,000? (Do not round your intermediate calculations.)
rev: 09_18_2012 2.63 years 1.38 years 3.76 years 0.88 years 1.88 years

2.63 years 1.38 years 3.76 years 0.88 years 1.88 years

An investment project has annual cash inflows of $4,600, $5,700, $6,500, and $7,800, and a discount rate of 13 percent.

Explanation / Answer

pay back after year 1 = 8000 - 4600/1.13 = 3929.20

pay back after year 2 = 3929.20/(5700/1.13^2) = 0.88

hence pay back = 1.88 years

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