Consider a project with the following cash flows: End of Year (n) Cash Flows ($) 0..-$22,400 1...4,500

Question:

Consider a project with the following cash flows:

End of Year (n) Cash Flows ($)

0………………………………..-$22,400

1…………………………………...4,500

2………………………………….12,670

3………………………………….14,780

4………………………………….13,650

5………………………………….11,440

6…………………………………..7,800

(a) At an interest rate of 18%, what is the discounted payback period?
(b) What is the discounted payback period if the interest rate is 0%?

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,...

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