An investment project costs $10,000 and has annual cash flows of $2,830 for six years. a. What is the discounted payback period

Question

VladimirAG [237]

3 years ago

6

An investment project costs $10,000 and has annual cash flows of $2,830 for six years. a. What is the discounted payback period

if the discount rate is 0 percent

Business

1 answer:

Tanya [424] · Answer 1 · 2022-10-09T22:27:03+03:00

Answer:

The payback period is 3.53 years.

Explanation:

The cost of investment project = $10000

The annual cash flows = $2830

Time period = 6 years

Since cost of project, annual cash flow and time period is given so we are required to calculate the discounted payback period when there is 0 % discount rate.

Payback period = Initial project cost / annual cash flow

= 10000 / 2830

=3.5335

= 3.53 years