Problem 12-6 Discounted Payback A project has an initial cost of $52,125, expect
ID: 2784672 • Letter: P
Question
Problem 12-6 Discounted Payback A project has an initial cost of $52,125, expected net cash inflows of $12,000 per year for 8 years, and a cost of capital of 12%. What is the project's discounted payback period? Round your answer to two decimal places. Problem 12-6 Discounted Payback A project has an initial cost of $52,125, expected net cash inflows of $12,000 per year for 8 years, and a cost of capital of 12%. What is the project's discounted payback period? Round your answer to two decimal places. Problem 12-6 Discounted Payback A project has an initial cost of $52,125, expected net cash inflows of $12,000 per year for 8 years, and a cost of capital of 12%. What is the project's discounted payback period? Round your answer to two decimal places.Explanation / Answer
Discounted Payback period=Last period with a negative cumulative cash flow+(Absolute value of cumulative cash flows at that period/Cash flow after that period).
=6+(2788.11/5428.19)
=6.51 yearws(Approx)
Year Cash flows Present value@12% Cumulative cash flows 0 (52125) (52125) (52125) 1 12000 10714.29 (41410.71) 2 12000 9566.33 (31844.38) 3 12000 8541.36 (23303.02) 4 12000 7626.22 (15676.80) 5 12000 6809.12 (8867.68) 6 12000 6079.57 (2788.11) 7 12000 5428.19 2640.08 8 12000 4846.60 7486.68