2. Discounted payback period. Given the following two projects and their cash flows, calculate the discounted payback period with a discount rate of 4%, 10%, and 18%. What do you notice about the payback period as the discount rate rises? Explain this relationship With a discount rate of 4%, the cash outflow for project A is: (Select the best response.) O A. recovered in 5 years. OB. recovered in 3 years. O c. recovered in 3.03 years. OD. never fully recovered. With a discount rate of 10%, the cash outflow for project A is: (Select the best response.) O A. recovered in 5 years. OB. recovered in 3.46 years. OC. recovered in 3 years. OD never fully recovered. With a discount rate of 18%, the cash outflow for project Ais: (Select the best response.) O A recovered in 4 years OB recovered in 3 years With a discount rate of 18%, the cash outflow for project A is: (Select the best response.) Prir O A. recovered in 4 years OB. recovered in 3 years. OC. recovered in 4.25 years. OD. never fully recovered. With a discount rate of 4%, the cash outflow for project B is: (Select the best response.) O A. recovered in 4.89 years. OB. recovered in 4 years. O C. recovered in 3 years. OD. never fully recovered. With a discount rate of 10%, the cash outflow for project B is: (Select the best response.) O A. recovered in 3 years. OB. recovered in 5 years. OC. recovered in 4 years. OD. never fully recovered. With a discount rate of 18% the cash outflow for project B is: (Select the best response.) With a discount rate of 18% the cash outflow for project B is: (Select the best response.) Print O A. recovered in 5 years. OB. recovered in 4 years. O C. recovered in 3 years. OD. never fully recovered. .. The reason is that the future dollars are worth As the discount rate increases, the discounted payback period (1) (2) in present value as the discount rate increases requiring (3) value of the outlay. (Select from the drop-down menus.) future dollars to recover the present 1: Data Table (Click on the following icon in order to copy its contents into a spreadsheet.) Cash Flow Cost Cash flow year 1 Cash flow year 2 Cash flow year 3 Cash flow year 4 Cash flow year 5 Cash flow year 6 $12,000 $4,286 $4,286 $4,286 $4,286 $4,286 B $110,000 $11,000 $22,000 $33,000 $44,000 $16,500 $4,286 $0 As the discount rate increases, the discounted payback period (1) . The reason is that the future dollars are worth future dollars to recover the present (2) _ in present value as the discount rate increases requiring (3) value of the outlay. (Select from the drop-down menus.) 1: Data Table (Click on the following icon in order to copy its contents into a spreadsheet.) $12,000 $4,286 $4,286 Cash Flow Cost Cash flow year 1 Cash flow year 2 Cash flow year 3 Cash flow year 4 Cash flow year 5 Cash flow year 6 $4,286 $110,000 $11,000 $22,000 $33,000 $44,000 $16,500 $0 $4,286 $4,286 $4,286 (1) O decreases increases (2) O more O less (3) O O more less
