Question

Siblene Penn is considering a project that has the following cash flow data. What is the discounted payback using a 11.2% cost of capital? Year 0 1 2 3 4 5 Cash flows -$6,750 $2,000 $2,025 $2,050 $2,075 $2,100

Answer 1

PV of inflow is calculated on excel by formula-
=PV(rate,nper,pmt,fv)

Year	Cashflow	Pv of CF	Cummulative PV
0	-6750	-6750	-6750
1	2000	1798.56	1798.56
2	2025	1637.63	3436.19
3	2050	1490.87	4927.06
4	2075	1357.06	6284.12
5	2100	1235.08	7519.20

Discounted payback period = 4 years + {(6750 - 6284.12) / 1235.08
Discounted payback period = 4.377 years

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