Homework Sourseind the discounted Payback period for the following project
| ind the discounted Payback period for the following project. The discount rate is 7% | ||||||
| Project X | ||||||
| Initial outlay | $ 17,110. | |||||
| Year 1 | $ 5740 | |||||
| Year2 | $ 5330 | |||||
| Year 3 | $ 5692 | |||||
| Year 4 | $ 8337 |
| ind the discounted Payback period for the following project. The discount rate is 7% | ||||||
| Project X | ||||||
| Initial outlay | $ 17,110. | |||||
| Year 1 | $ 5740 | |||||
| Year2 | $ 5330 | |||||
| Year 3 | $ 5692 | |||||
| Year 4 | $ 8337 |
Solution
Present value of year 1 cash flow = 5740 / ( 1 + 0.07)1 = 5,364.486
Present value of year 2 cash flow = 5330 / ( 1 + 0.07)2 = 4,655.428
Present value of year 3 cash flow = 5692 / ( 1 + 0.07)3 = 4,646.368
