Question

Compute the discounted payback statistic for Project C if the appropriate cost of capital is 8 percent and the maximum allowable discounted payback period is three years. (Do not round intermediate calculations. Round your final answer to 2 decimal places)

Time: 0 1 2 3 4 5
Cash Flow: -$1000 $480 $480 $520 $300 $100
Discounted payback period = ? years

Answer 1

2.35 years

Step-by-step explanation:

Discounted pay back period calculates the amount of years it takes to recover the amount invested from the cumulative cash flows.

Explanations on how the discounted cash flow period was calculated can be found in the attached image.

Check for the formula for discounted cash flows in the second attached image

I hope my answer helps you