A project has an initial cost of $8,500 and produces cash
inflows of $2,700, $5,000, and...
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Finance
A project has an initial cost of $8,500 and produces cashinflows of $2,700, $5,000, and $1,600 over the next three years,respectively. What is the discounted payback period if the requiredrate of return is 7 percent?
A) 2.30 years
B) 2.15 years
C) 2.91 years
D) never
E) 2.50 years
Answer & Explanation
Solved by verified expert
3.8 Ratings (466 Votes)
Calculation of Discounted Payback period
Time
Amount
PVf
PV
Cumulative
-
(8,500.00)
1.00
(8,500.00)
(8,500.00)
1.00
2,700.00
0.93
2,523.36
(5,976.64)
2.00
5,000.00
0.87
4,367.19
(1,609.44)
3.00
1,600.00
0.82
1,306.08
(303.37)
From the
above data, payback can never be calculated.
So correct answer is never.
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