Question

An investment of $1,748,000 today yields positive cash flows of $400,000 each year for years 1...

An investment of $1,748,000 today yields positive cash flows of $400,000 each year for years 1 through 10. MARR is 19%. Determine the discount payback period of this investment.

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Answer #1
Year Cash flows Present value@19% Cumulative Cash flows
0 (1748000) (1748000) (1748000)
1 400,000 336134.45 (1,411,865.55)
2 400,000 282465.93 (1,129,399.62)
3 400,000 237366.33 (892033.29)
4 400,000 199467.50 (692565.79)
5 400,000 167619.75 (524946.04)
6 400,000 140856.93 (384089.11)
7 400,000 118367.17 (265721.94)
8 400,000 99468.21 (166253.73)
9 400,000 83586.73 (82667)
10 400,000 70240.95 (12426.05)

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).

=0.(payback is not possible as per discounted payback method).

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