Explore BrainMass

Explore BrainMass

    Capital Budgeting : Discounted Payback Period

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    An investment project costs $17,300 and has annual cash flows of $3,900 for 6 years. If the discount rate is zero percent, the discounted payback period is ________years.

    If the discount rate is 6 percent, the discounted payback period is ___________years.

    If the discount rate is 21 percent, the discounted payback period is _____years.

    © BrainMass Inc. brainmass.com June 4, 2020, 2:06 am ad1c9bdddf
    https://brainmass.com/business/discounted-cash-flows-model/calculate-discounted-payback-period-438786

    Solution Preview

    Please refer attached file for better clarity of tables.

    Discount Rate=0%

    Year End Cash Flows PV at 0% Cumulative PV
    n Cn Cn/(1+0%)^n
    1 3900 3900 3900.00
    2 3900 3900 7800.00
    3 3900 3900 11700.00
    4 3900 3900 15600.00
    5 3900 3900 19500.00
    6 ...

    Solution Summary

    Solution describes the steps to calculate discounted payback period.

    $2.19

    ADVERTISEMENT