Consider the investment projects in Table P7, all of which have a four-y vestment life. TABLE P7 11 0 A -$2,500 Project's Cash Flow ($) B C -$3,500 -$2,800 D -$2,300 6100Y
Consider the investment projects in Table P7, all of which have a four-y vestment life. TABLE P7 11 0 A -$2,500 Project's Cash Flow ($) B C -$3,500 -$2,800 D -$2,300 6100Y
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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
Transcribed Image Text:7 Consider the investment projects in Table P7, all of which have a four-year in-
vestment life.
TABLE P7
11
0
1
2
3
4
A
--$2,500
$0
$0
$0
$6.200
Project's Cash Flow ($)
B
C
-$3,500
-$2,800
$1,600 -$1,800
$2,800
-$900
$3,500
$4,500
$2,200
$4,500
D
-$2,300
-$1,000
$1,900
$2,300
$1,500
(a) What is the payback period of each project?
(b) What is the discounted payback period at an interest rate of 15% for each
project?
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