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Jenny Martin
on Nov 08, 2024

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A 30 year project is estimated to cost $35 million dollars and provide annual cash flows of $5 per year in years 1-5; $4 million per year in years 6-20 and $2 million per year in years 21-30. If the company's required rate of return is 10%, determine the discounted payback for the project.

A) 15.90 years
B) 13.90 years
C) 11.90 years
D) 9.90 years
E) 7.90 years

Required Rate Of Return

The minimum annual percentage return an investor expects to achieve from an investment.

Discounted Payback

A capital budgeting method that calculates the length of time it takes to break even from an investment based on its discounted cash flows.

  • Understand the importance of the payback period when making investment decisions.
  • Employ discounted cash flow strategies for the appraisal of extended-duration projects.
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Cristine PecsonNov 10, 2024
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