Question
The conventional payback period ignores the time value of money, and this concerns Cold Goose's CFO. He has now asked you to compute Beta's discounted
The conventional payback period ignores the time value of money, and this concerns Cold Goose's CFO. He has now asked you to compute Beta's discounted payback period, assuming the company has a 8% cost of capital. Using the below table, find the discounted payback period while rounding to decimal places.
| Year 0 | Year 1 | Year 2 | Year 3 | |
| Cash flow | -5,000,000 | $2,000,000 | $4,250,000 | $1,750,000 |
| Discounted cash flow | -5,000,000 | 1,851,852 | 3,643,690 | 1,389,206 |
| A. | 1.12 years | |
| B. | 2.86 years | |
| C. | 1.86 years | |
| D. | 2.12 years |
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Securitisation Derivatives A Practioner's Handbook
Authors: Mark Aarons, Vlad Ender, Andrew Wilkinson
1st Edition
1119532272, 978-1119532279
