Question

An investment project costs $10,000 and has annual cash flows of $2,830 for six years. a. What is the discounted payback period if the discount rate is 0 percent

Answer 1

The payback period is 3.53 years.

Step-by-step explanation:

The cost of investment project = $10000

The annual cash flows = $2830

Time period = 6 years

Since cost of project, annual cash flow and time period is given so we are required to calculate the discounted payback period when there is 0 % discount rate.

Payback period = Initial project cost / annual cash flow

= 10000 / 2830

=3.5335

= 3.53 years