Given the following cash flows for a capital project, calculate its payback period and discounted payback period.

Question:

Given the following cash flows for a capital project, calculate its payback period and discounted payback period. The required rate of return is 8 percent. The discounted payback period is

a. 0.16 year longer than the payback period.
b. 0.80 year longer than the payback period.
c. 1.01 years longer than the payback period.
d. 1.85 years longer than the payback period.

Payback Period
Payback period method is a traditional method/ approach of capital budgeting. It is the simple and widely used quantitative method of Investment evaluation. Payback period is typically used to evaluate projects or investments before undergoing them,...