- Capital Budgeting
- Capital Budgeting Ratios
- Payback Period and Discounted Payback Period
What is the project's discounted payback?
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9. Fernando Designs is considering a project that has the following cash flow and WACC data. What is the project's discounted payback?
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Year 0 1 2 3
Cash flows -$950 $500 $500 $500.
PV of Cash Flows in Year 1 = 500/1.1 = 454.54
PV of Cash Flows in Year 2 = 500/(1.1)^2 = ...
This solution provides a calculation for the present value of cash flows at year 1, 2, and 3, and then uses this information to calculate cumulative cash flows in order to find the discounted payback.