Question
Given the following two projects and their cash flows, , calculate the discounted payback period with a discount rate of 6%, 8%,and 18%. What do
Given the following two projects and their cash flows,
, calculate the discounted payback period with a discount rate of 6%, 8%,and 18%.
What do you notice about the payback period as the discount rate rises? Explain this relationship.
With a discount rate of 6%,
the cash outflow for project A is:
A. recovered in 5 years.
B.recovered in 3.16 years.
C.recovered in 3 years.
D.never fully recovered.
Cash Flow | A | B | ||
Cost | $8,000 | $100,000 | ||
Cash flow year 1 | $2,857 | $10,000 | ||
Cash flow year 2 | $2,857 | $20,000 | ||
Cash flow year 3 | $2,857 | $30,000 | ||
Cash flow year 4 | $2,857 | $40,000 | ||
Cash flow year 5 | $2,857 | $15,000 | ||
Cash flow year 6 | $2,857 | $0 |
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