Question

An investment project has annual cash inflows of $4,600, $3,700, $4,900, and $4,100, for the next four years, respectively. The discount rate is 13 percent. What is the discounted payback period for these cash flows if the initial cost is $5,500

Answer 1

Answer:

the discount payback period is 1.49 year

Explanation:

The computation of the discount payback period is as follows;

= 1 year + ($5,500 - $4,078.80) ÷ ($2,897.64)

= 1 year + ($1,421.20) ÷ ($2,897.64)

= 1 year + 0.49 years

= 1.49 year

Hence, the discount payback period is 1.49 year

The working note regarding the cash flows are to be shown in the attachment