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

	a.	3.88 years
	b.	3.33 years
	c.	4.38 years
	d.	4.67 years
	e.	3.62 years

Answer 1

Correct Answer is option C
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 = 4.38 years

I hope this clear your doubt.

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