Problem 5-3 Calculating Discounted Payback An investment project has annual cash inflows of $3,500, $4,400, $5,600, and $4,800, for the next four years, respectively. The discount rate is 14 percent. a. What is the discounted payback period for these cash flows if the initial cost is $6,200? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the discounted payback period for these cash flows if the initial cost is $8,300? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the discounted payback period for these cash flows if the initial cost is $11,300? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Discounted payback period b. Discounted payback period c. Discounted payback period years years years
Problem 5-3 Calculating Discounted Payback An investment project has annual cash inflows of $3,500, $4,400, $5,600, and $4,800, for the next four years, respectively. The discount rate is 14 percent. a. What is the discounted payback period for these cash flows if the initial cost is $6,200? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the discounted payback period for these cash flows if the initial cost is $8,300? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the discounted payback period for these cash flows if the initial cost is $11,300? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Discounted payback period b. Discounted payback period c. Discounted payback period years years 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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Transcribed Image Text:Problem 5-3 Calculating Discounted Payback
An investment project has annual cash inflows of $3,500, $4,400, $5,600, and $4,800,
for the next four years, respectively. The discount rate is 14 percent.
a. What is the discounted payback period for these cash flows if the initial cost is
$6,200? (Do not round intermediate calculations and round your answer to 2
decimal places, e.g., 32.16.)
b. What is the discounted payback period for these cash flows if the initial cost is
$8,300? (Do not round intermediate calculations and round your answer to 2
decimal places, e.g., 32.16.)
c. What is the discounted payback period for these cash flows if the initial cost is
$11,300? (Do not round intermediate calculations and round your answer to 2
decimal places, e.g., 32.16.)
a. Discounted payback period
b. Discounted payback period
c. Discounted payback period
years
years
years
Expert Solution
Introduction;
Discounted payback period is the period required for an investment to pay back its initial cost after taking time value of money into the effect.
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