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Capital Budgeting : Discounted Payback Period

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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.

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Solution describes the steps to calculate discounted payback period.

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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 provided by:
Lokesh Jain, MSc
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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