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Compute the discounted payback statistic for Project D if the appropriate cost of capital is 12...

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Finance

Compute the discounted payback statistic for Project D if theappropriate cost of capital is 12 percent and the maximum allowablediscounted payback is four years. (Do not roundintermediate calculations and round your final answer to 2 decimalplaces. If the project does not pay back, then enter a "0"(zero).)

Project D
Time:012345
Cash flow:–$11,000$3,350$4,180$1,520$300$1,000

Discounted payback period _______ years

Should the project be accepted or rejected?

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4.2 Ratings (540 Votes)

Project D
i Time:                         -                         1                       2                       3                       4                       5
ii Cash flow:                (11,000)                3,350                4,180                1,520                   300                1,000
iii PVIF @ 12%     1.000000 0.892857 0.797194 0.711780 0.635518 0.567427
iv=ii*iii Present value (11,000.00)    2,991.07    3,332.27    1,081.91       190.66       567.43 (2,836.67)
As NPV is negative therefore project will not have discounted payback period.
Ans = 0 Year
Should the project be accepted or rejected? - Project should be REJECTED

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