Given the cash flow of two projects, A and B: Cash Flow Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Project A -$14,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 Project B -$95,000 $19,000 $9,500 $38,000 $28,000 $20,000 $10,000 The firm's weighted average cost of capital is 10%. The firm's required payback and discounted payback period is 3 years.

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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What is Project A's Discounted Payback Period?

Use the following information to answer the next 3 questions:
Given the cash flow of two projects, A and B:
Cash
Flow
Year 0
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Project A
-$14,000
$7,000
$7,000
$7,000
$7,000
$7,000
$7,000
Project B
-$95,000
$19,000
$9,500
$38,000
$28,000
$20,000
$10,000
The firm's weighted average cost of capital is 10%. The firm's required payback and
discounted payback period is 3 years.
Transcribed Image Text:Use the following information to answer the next 3 questions: Given the cash flow of two projects, A and B: Cash Flow Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Project A -$14,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 Project B -$95,000 $19,000 $9,500 $38,000 $28,000 $20,000 $10,000 The firm's weighted average cost of capital is 10%. The firm's required payback and discounted payback period is 3 years.
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