The discounted payback period for the project is 2.33 years.
Time Cashflow PVF at 8% Present value Cumulative Present value
0 -$100 1 -100 -100
1 40 0.925926 37.03704 -62.963
<u><em>2 50 0.857339 42.86694 -20.096</em></u>
3 60 0.793832 47.62993 27.53391
<u>Note</u>
- The PVF for each year are derived using the PVF calculator (i.e PVF, 8%, 0 years)
- We can also observe that we are able to payback the money before the entire 3rd year, therefore, the 2nd year will be used in calculation of discounted payback period.
Discounted payback period = 2 Years + 20.096/47.6299
Discounted payback period = 2 Years + 0.33
Discounted payback period = 2.33 years.
Therefore, the discounted payback period for the project is 2.33 years.
Missing word includes <em>"Compute the discounted payback period for a project with the following cash flows received uniformly within each year and with a required return of 8%: Initial Outlay = $100 Cash Flows: Year 1 = $40 Year 2 = $50 Year 3 = $60"</em>
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