Rodriquez's Hot Rods is considering a new project with an initial cost of $26,410 and a discount rate of 8 percent.The project is expected to have one cash inflow of $42,500 in Year 2.What is the discounted payback period?
A).72 years
B)1.39 years
C).62 years
D)1.72 years
E)1.62 years

Question

Quizplus · Accepted Answer

Discounted Year 2 cash flow = $42,500/1.08² = $36,436.90Discounted payback period = 1 + $26,410/$36,436.90 = 1.72 years

Rodriquez's Hot Rods Is Considering a New Project with an Initial