Corporate Finance
Corporate Finance
12th Edition
ISBN: 9781259918940
Author: Ross, Stephen A.
Publisher: Mcgraw-hill Education,
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Chapter 5, Problem 4QAP
Summary Introduction

Discounted Payback period:

Payback period determine the period within which the investment is able to recover the cost or amount invested. This is referred as a period at which the investor is at par with all the cash recovered that have been invested. However, the cumulative cashflows shall be taken after computing the present value of cashflows

Requirement 1

To determine:

The project to be accepted as per discounted payback period at 0%.

Requirement 2

To determine:

The project to be accepted as per discounted payback period at 10%.

Requirement 3

To determine:

The project to be accepted as per discounted payback period at 17%.

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Calculating Discounted Payback An investment project costs $15,100 and has annual cash flows of $3,900 for 6 years. What is the discounted payback period if the discount rate is 0 percent? What if the discount rate is 10 percent? If it is 17 percent?
An investment project costs $14,100 and has annual cash flows of $3,200 for six years. a. What is the discounted payback period if the discount rate is zero percent? Discounted payback period b. What is the discounted payback period if the discount rate is 3 percent? Discounted payback periód
a) The cost of a proposed project is $10,000 and has annual cash flows pf $2,900 for six years. a. What is the discounted payback period if the discount rate is 0.5%? b. What is the discounted payback period if the discount rate is 5%? c. What is the discounted payback period if the discount rate is 20%?

Chapter 5 Solutions

Corporate Finance

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