An investment with an initial cost of $15,000 produces cash flows of $5,000 annually for 5 years.At a discount rate of 10 percent,what is the discounted payback period?
A)3.00 years
B)3.21 years
C)3.75 years
D)3.89 years
E)Never

Question

Quizplus · Accepted Answer

The discounted payback period is the time it takes for the present value of cash flows to cover the initial investment. Calculating the present value of each cash flow at a 10% discount rate and summing them until they equal the initial investment gives approximately 3.75 years.

An Investment with an Initial Cost of $15,000 Produces Cash