Question

A project has an initial cash outflow of $890 and cash inflows of $260 per year for 4 years. What is the discounted payback period at a discount rate of 9.2 percent?

3.43 years

3.74 years

2.81 years

Never

Answer 1

Year	Cash flow	Discount factor @ 9.2%	Discounted value
1	$ 260.00	0.916	$ 238.10
2	$ 260.00	0.839	$ 218.04
3	$ 260.00	0.768	$ 199.67
4	$ 260.00	0.703	$ 182.84
Total			$ 838.64
Discounted payback period is the period in which discounted cash flows is equal to initial cash outflow.
In this case, discount present value is less than initial cash flow. So, It will not be able to achieve discounted payback period.