Compute the discounted payback statistic for Project C if the appropriate cost of capital is 7 percent and the maximum allowable discounted payback period is three years. (Do not round intermediate calculations and round your final answer to 2 decimal places.)
Project C | ||||||
Time: | 0 | 1 | 2 | 3 | 4 | 5 |
Cash flow: | –$1,400 | $640 | $600 | $640 | $380 | $180 |
Should the project be accepted or rejected?
Calculation of Discounted Payback Period:
The discounted payback period is 2.53 years.
Excel Spreadsheet:
Excel Workings:
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