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What is the DISCOUNTED payback period (decimal YEARS) for an investment of $48,000 with an annual...

What is the DISCOUNTED payback period (decimal YEARS) for an investment of $48,000 with an annual investment income of $6,000 starting at the end of the first year (i=6% annual).

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Answer #1
Year Cash flows Present value@6% Cumulative Cash flows
0 (48000) (48000) (48000)
1 6000 5660.38 (42339.62)
2 6000 5339.98 (36999.64)
3 6000 5037.72 (31961.92)
4 6000 4752.56 (27209.36)
5 6000 4483.55 (22725.81)
6 6000 4229.76 (18496.05)
7 6000 3990.34 (14505.71)
8 6000 3764.47 (10741.24)
9 6000 3551.39 (7189.85)
10 6000 3350.37 (3839.48)
11 6000 3160.73 (678.75)
12 6000 2981.82 2303.07(Approx).

Hence discounted Payback period=Last period with a negative cumulative cash flow+(Absolute value of cumulative cash flows at that period/Cash flow after that period).

=11+(678.75/2981.82)

=11.23 years(Approx).

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