Question

# an investment project has annual cash inflows of 4,800,5,900,6,700 and 8,000 for the next four years...

an investment project has annual cash inflows of 4,800,5,900,6,700 and 8,000 for the next four years respectively and a discount rate of 15 percent.

what is the discounted payback period for these cash flows if the intiial cost is 8000

 Year Cash flow stream Cumulative cash flow Discounting factor Discounted cash flows project Cumulative discounted CF 0 -8000 -8000 1 -8000 -8000.00 1 4800 -3200 1.15 4173.913043 -3826.09 2 5900 2700 1.3225 4461.247637 635.16 3 6700 9400 1.520875 4405.358757 5040.52 4 8000 17400 1.74900625 4574.025965 9614.55
 Discounted payback period is the time by which discounted cashflow cover the intial investment outlay this is happening between year 1 and 2 therefore by interpolation payback period = 1 + (0-(-3826.09))/(635.16-(-3826.09)) 1.86 Years Where Discounting factor =(1 + discount rate)^(corresponding year) Discounted Cashflow=Cash flow stream/discounting factor

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