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Project l costs $35,000, its expected cash inflows are $10,000 per year for 8 years, and its wacc is 9%. what is the project's discounted payback? round your answer to two decimal places

Sagot :

The discounted payback is [tex]4.40[/tex] years.

Discounted payback:

  • The discounted payback period is a capital budgeting technique used to evaluate a project's profitability. By discounting future cash flows and taking into account the time value of money, a discounted payback period calculates how many years it will take to recover the initial investment.
  • Absolute value of discounted cash flows over all of period y. Make a table with columns for the periods, cash flows, discounted cash flows, and cumulative discounted cash flows in order to compute the DPP.

Project L costs [tex]$=\$ 350,00$[/tex]

Discounted pay Back period[tex]$=4$[/tex] years [tex]$+\frac{\$ 350,00-\$ 32,397}{\$ 6,499}$[/tex]  (D.P.B.P.)

D.P.B.P =[tex]4[/tex]  yeas [tex]+\frac{\$ 2603}{\$ 6499} \\[/tex]

D.P.B.P =[tex]4[/tex] years[tex]+0.400[/tex] year.

D.P.BP [tex]=4.40[/tex] years.

Discounted payback=   [tex]=4.40[/tex] years.

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