Question

**Sky Enterprises is considering an investment project
with the following cash flows:**

**Year Cash
Flow**

**0
-$100,000**

**1
30,000**

**2
40,000**

**3
60,000**

**4
90,000**

The company has a 7% cost of capital. What is the project’s discounted payback period?

A. 2.76 years

B. 1.86 years

C. 1.86 years

D. 1.67 years

E. more than 3 years

Answer #1

**The discounted payback period is computed as shown
below:**

**Cumulative discounted cash flows from year 1 to year 2
is computed as follows:**

= $ 30,000 / 1.07^{1} + $ 40,000 / 1.07^{2}

**= $ 62,974.93231**

**Cumulative discounted cash flows from year 1 to year 3
is computed as follows:**

= $ 30,000 / 1.07^{1} + $ 40,000 / 1.07^{2} + $
60,000 / 1.07^{3}

**= $ 111,952.8049**

**It means that the discounted payback period lies between
year 1 and year 3, since the initial investment of $ 100,000 is
recovered between them. So, the discounted payback period will be
computed as follows:**

**= 2 years + Balance investment to be recovered / Year 3
discounted cash flow**

= 2 years + [ ($ 100,000 - $ 62,974.93231) / ( $ 60,000 /
1.07^{3}) ]

= 2 years + $ 37,025.06769 / $ 48,977.87261

**= 2.76 years Approximately**

**Feel free to ask in case of any query relating to this
question**

A project that requires an initial investment of $100,000 and
generates the following cash flows:
YEAR
CASH FLOWS
1
30,000
2
35,000
3
40,000
4
20,000
5
19,000
If the cost of capital is 8.5% have a discounted payback period
of _______________

project that requires an initial investment of $100,000 and
generates the following cash flows:
YEAR
CASH FLOWS
1
30,000
2
35,000
3
40,000
4
20,000
5
19,000
If the cost of capital is 8.5% have a discounted payback period
of _______________
Seleccione una:
3.856 years
2.875 years
3.665 years
2.856 years
3.875 years
not enough data to answer

(Discounted payback period) Sheinhardt Wig Company is
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1 20,000
2 50,000
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Year
Project Cash Flow? (millions)
0
?$(210?)
1
100
2
72
3
100
4
90
If the? project's
appropriate discount rate is
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Cash
flow
0
-5,500
1
2,000
2
3,000
3
1,000
4
2,000
a. What is
the payback period of this project? If the
pre-specified cut off is 3 years,
should this project be accepted?
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the discounted
payback period of this
project? If the
pre-specified cut off is 3 years, should this project be
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Polk Products is considering
an investment project with the following cash flows (in
000s):
Year 0
Year 1
Year 2
Year 3
Cashflow
-100
90
90
30
The company has a 10% cost of
capital.
What is the payback period for the
project?
What is the discounted payback period for the
project?
What is the IRR for the
project?
What is the NPV for the
project?
What is the MIRR for the
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Shannon Industries is considering a project which has the
following cash flows:
Year Cash Flow
0 ?
1 $2,000
2 $3,000
3 $3,000
4 $1,500
The project has a payback period of 2 years. The
firm’s cost of capital is 12 percent. What is
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a. $ 570
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Year Cash flow
0 (700)
1 200
2 370
3 225
4 700
The project's cost of capital is 10%. What is the project's
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flows:
YEAR CASH FLOWS
0-( -R200 000)
1- 50 000
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1.
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