Question

Asked Nov 7, 2019

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Judson's cost of capital is 12%, what is the DISCOUNTED Payback Period for the project?

Year | Cash Flow in $ |

0 | ($1000) |

1 | 400 |

2 | 400 |

3 | 600 |

Step 1

Discounted payback period is calculated by finding the present value of all the cash flows and then using the cumulative cash flow method to determine the number of years it will take to repay the investment.

Please refer to the whiteboard for the calculation

Step 2

Excel Workings:

Step 3

Last Period with negative discounted cumulative cash flow is “*A*”.

Absolute value of the discounted cumulative cash flow at the end of pe...

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