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|
|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))|
|Discounting factor =(1 + discount rate)^(corresponding year)|
|Discounted Cashflow=Cash flow stream/discounting factor|
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