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Please explain how to come up with the interpolation equation for the discounted playback period. I do not understand where the 5, 345 and 2371
Please explain how to come up with the interpolation equation for the discounted playback period. I do not understand where the 5, 345 and 2371 came from. Thank you!!
b] When the discount rate is 4%, the PV of each year's cash flows is to be calculated and cumulated to find the year in which the payback occurs. The calculations are done in the table below: The discounted payback occurs in the year 6 . By interpolation, the discounted payback period =5+345/2371=5.15 years. Explanation: While interpolating the discounted payback period, it is assumed that the cash flows occur evenly during each yearStep by Step Solution
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