$[$SOLVE DISCOUNTED PAYBACK PERIOD ONLY$]$The payback period

Consider this case:

Defense Dynamics Co$.$ is considering a project that will require an initial investment of $$500,000.$ The company's CFO wants to know how long it will

take to recover its initial investment in the project. The project's expected net cash flows are:

Year $2$$$475,000$

Year $3$$$475,000$

Based on this information, determine the project's payback period.

$1\mathrm{.}10$ years

$1\mathrm{.}37$ years

$1\mathrm{.}64$ years

$1\mathrm{.}16$ years

The regular payback period ignores the time value of money, which concerns Defense Dynamics Co$.\text{'}$s CFO. Calculate the project's discounted payback

period. Assume that the project's WACC is $10\%.$

$1\mathrm{.}82$ years

$1\mathrm{.}52$ years

$1\mathrm{.}29$ years

$1\mathrm{.}22$ years

The discounted payback period will always be longer $,$ than the regular payback period.