Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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![4. Calculating Discounted Payback [LO3] An
investment project has annual cash inflows of $2,800,
$3,700, $5,100, and $4,300, for the next four years,
respectively. The discount rate is 11 percent. What is the
discounted payback period for these cash flows if the initial
cost is $5,200? What if the initial cost is $6,40o? What if it is
$10,400?](https://content.bartleby.com/qna-images/question/a67834ee-0fdf-4424-b804-68a4c92cb763/533656d3-0a3a-455e-942f-d16ade4ba968/09yw2n_processed.png)
Transcribed Image Text:4. Calculating Discounted Payback [LO3] An
investment project has annual cash inflows of $2,800,
$3,700, $5,100, and $4,300, for the next four years,
respectively. The discount rate is 11 percent. What is the
discounted payback period for these cash flows if the initial
cost is $5,200? What if the initial cost is $6,40o? What if it is
$10,400?
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- The cost estimate for a pipe replacement project is estimated at $6 million in today's dollars. The project will start construction in 5 years. Assume that the inflation rate is 8.5 percent per year. How much should be allocated for the project to account for inflation? 1. $11M 2. $9M 3. $7M 4. $12Marrow_forwardSuppose you considering investing $33 to earn $5.9 every year for 9 years. If the annual interest rate is 4.8%, what is the payback of this project? Suppose you considering investing $22 to earn $4.0 every year for 7 years. If the annual interest rate is 3.4%, what is the payback of this project?arrow_forwardYou are considering a project with an initial cost of $8245 and a required return of 11.6%. What is the discounted payback if the expected cash flows are $3148, $3429, $2731, $3048, and $3930 respectively over the next 5 years? a. 3.66 years b. 3.66 years c. 3.36 years ✔ d. 2.96 years e. 2.98 yearsarrow_forward
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