Yancy is considering a project which will produce cash inflows of $900 a year for 4 years. The project has a 9 percent required rate of return and an initial cost of $2,800. What is the discounted payback period?
We compute the PV of each cash flow by the 9% discount rate:
PV(t) = CF / ...
This solution calculates the discounted payback period based on the rate of return and initial costs.