Question

Asked Oct 27, 2019

Need help figuring this out and setting up in Excel with formulas.

Step 1

Payback period is the time when the cumulative cash flow turns out to be zero. Discounted payback period is when cumulative discounted cash flows turns out to be zero.

Approach:

- We will calculate the cumulative cash flows each year
- We will calculate the discount factor corresponding to each year using the formula, D = (1 + r)
^{-t}where r is the discount rate = 9.5% and t is the year number - We will then calculate the cumulative discounted cash flows

Step 2

Please see the white board. The cells highlighted in yellow deserve your attention. Figures in parenthesis, if any, mean negative values.&nb...

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