Your firm is considering an investment that will cost $750,000 today. The investment will produce cash flows of $250,000 in year 1, $300,000 in years 2 through 4, and $100,000 in year 5. What is the investment's discounted payback period if the required rate of return is 10%?

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
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Your firm is considering an investment that will cost $750,000 today. The investment will
produce cash flows of $250,000 in year 1, $300,000 in years 2 through 4, and $100,000 in
year 5. What is the investment's discounted payback period if the required rate of return is
10%?
Answer
3.33 years
3.16 years
2.67 years
2.33 years
Transcribed Image Text:Your firm is considering an investment that will cost $750,000 today. The investment will produce cash flows of $250,000 in year 1, $300,000 in years 2 through 4, and $100,000 in year 5. What is the investment's discounted payback period if the required rate of return is 10%? Answer 3.33 years 3.16 years 2.67 years 2.33 years
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