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Project L costs $40,000, it's expected cash inflows are $9000 per year for 8 years, and...

Project L costs $40,000, it's expected cash inflows are $9000 per year for 8 years, and its WACC is 11%. What is the project's discounted payback? Round your answer to two decimal places.

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Answer #1
Year Cash flows Present value@11% Cumulative Cash flows
0 (40000) (40000) (40000)
1 9000 8108.11 (31891.89)
2 9000 7304.60 (24587.29)
3 9000 6580.72 (18006.57)
4 9000 5928.58 (12077.99)
5 9000 5341.06 (6736.93)
6 9000 4811.77 (1925.16)
7 9000 4334.93 2409.77
8 9000 3905.34 6315.11

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).

=6+(1925.16/4334.93)

=6.44 years(Approx)

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