Compute the discounted payback statistic for Project C if the appropriate cost o

Question

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. Round your final answer to 2 decimal places.)

  

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. Round your final answer to 2 decimal places.)

Explanation / Answer

This would go on upto year 5

Hence discounted Payback period=Last period with a negative cumulative cash flow+(Absolute value of cumulative cash flows at that period/Cash flow after that period).

2+(367.49/555.68)

=2.66 years(Approx)

Year Cash flows Present value@8% Cumulative Cash flows 0 (1600) (1600) (1600) 1 720 666.67 (933.33) 2 660 565.84 (367.49) 3 700 555.68 188.19

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