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Fundamentals of Financial Manageme...

9th Edition
Eugene F. Brigham + 1 other
ISBN: 9781305635937

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BuyFindarrow_forward

Fundamentals of Financial Manageme...

9th Edition
Eugene F. Brigham + 1 other
ISBN: 9781305635937
Textbook Problem
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DISCOUNTED PAYBACK Refer to problem 11-1. What is the project’s discounted payback?

Summary Introduction

To calculate: The discounted payback period for the given project.

Introduction:

Discounted Payback Period:

It refers to the time period that a project takes to repay the amount invested with some returns attached to it and it is after considering the time value of money or discounted cash flows.

Explanation

Given information:

Cost of the project is $65,000.

Life of project is 9 years.

Cash inflow from project per year is $12,000.

Cost of capital of the project is 9%.

The formula to calculate the discounted payback period is,

(Dicountedpaybackperiod)=(YearoflastnegativeCumulativepresentvalue)+|Lastnegativecumulativepresentvalue|(Positivepresentvalueinthe

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