Shannon Co.is considering a project that has the following cash flow and cost of capital (r) data.What is the project's discounted payback? $$\begin{array} { l c c c c c }
& r = 10.00 \% \
\text { Year } & 0 & 1 & 2 & 3 & 4 \
\hline \text { Cash flows } & - \$ 950 & \$ 525 & \$ 485 & \$ 445 & \$ 405
\end{array}$$
A) 1.61 years
B) 1.79 years
C) 1.99 years
D) 2.22 years
E) 2.44 years

Question

Shannon Co.is considering a project that has the following cash flow and cost of capital (r) data.What is the project's discounted payback? $$\begin{array} { l c c c c c } 
& r = 10.00 \% \
\text { Year } & 0 & 1 & 2 & 3 & 4 \
\hline  \text { Cash flows } & - \$ 950 & \$ 525 & \$ 485 & \$ 445 & \$ 405
\end{array}$$
A) 1.61 years
B) 1.79 years
C) 1.99 years
D) 2.22 years
E) 2.44 years

Quizplus · Accepted Answer

The discounted payback period is the time it takes for the present value of cash inflows to cover the initial investment. Discount each cash flow at 10% and sum them until they equal or exceed $950. The discounted payback period is approximately 2.22 years.

Shannon Co A) 161 Years B) 1

Shannon Co A) 161 Years
B) 1