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Discounted Payback

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15. Fernando Designs is considering a project that has the following cash flow and WACC data. What is the project's discounted payback?
WACC: 10.00%
Year 0 1 2 3
Cash flows -$700 $500 $500 $500

1.26 years
1.47 years
1.59 years
1.86 years
1.39 years

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The solution goes into a great amount of detail regarding the question being asked. Step by step explanation is provided for each part of the question which makes it very easy to follow along for anyone with just a basic understanding of the concepts. Overall, an excellent response to the question being asked.

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PV of Cash Flow in Year 1 = 500/(1.1)=$454.54
PV of Cash Flow in Year 2 = ...

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