Using a 7% annual cost of capital, what is the discounted payback period in years of...

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Finance

Using a 7% annual cost of capital, what is the discountedpayback period in years of the potential project below? round to 2decimals
Year-----Cash Flows
0..............-5000
1...............1625
2..............1668
3..............1616
4..............1679
5..............1619
can you please let me know how you find this? especially ifusing a financial calculator. Thanks!

Answer & Explanation Solved by verified expert

3.6 Ratings (317 Votes)

Ans 3.55 years

Year	Project Cash Flows (i)	DF@ 7% (ii)	DF@ 7% (ii)	PV of Project A ( (i) * (ii) )	Cumulative Cash Flow
0	-5000	1	1	(5,000.00)	(5,000.00)
1	1625	1/ (1 + 7%)^1	0.935	1,518.69	(3,481.31)
2	1668	1/ (1 + 7%)^2	0.873	1,456.90	(2,024.41)
3	1616	1/ (1 + 7%)^3	0.816	1,319.14	(705.28)
4	1679	1/ (1 + 7%)^4	0.763	1,280.90	575.63
5	1619	1/ (1 + 7%)^5	0.713	1,154.32	1,729.95
		TOTAL		1,729.95


Discounted Payback Period =		3 YEARS + 705.28 / 1280.90
		3.55 YEARS

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Using a 7% annual cost of capital, what is the discountedpayback period in years of the potential project below? round to 2decimalsYear-----Cash Flows0..............-50001...............16252..............16683..............16164..............16795..............1619can you please let me know how you find this? especially ifusing a financial calculator. Thanks!