1 answer

What is the discounted payback period of Project A in the following table if MARR is...

Question:


What is the discounted payback period of Project A in the following table if MARR is 15%? Projects Cash Flow Model A Model B
What is the discounted payback period of Project A in the following table if MARR is 15%? Project's Cash Flow Model A Model B 0 -$6,000 3,500 3,500 -$15,000 10,000 10,000 3,500 Select one: a. 1 year cross out cross out b. 2 years cross out c. 3 years cross out d. no payback period

Answers

B) 2 years

explanation:

Year Cash flow discounted cash flow net discounted cash flow
0 -6,000 -6,000 -6,000
1 3,500 3,043.48 -2,956.52
2 3,500 2,646.50 -310.02
3 3,500 2,301.31 1,991.29

DPB= 2 + 310.02÷2,301.31

= 2 + 0.13

= 2.13 years

2 years is closet to it, if rounded off. So, We choose 2 years.

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