Question

( Discounted payback period) Gio's Restaurants is considering a project with the following expected cash flows. If the project's appropriate discount rate is 11 percent, what is the projects's discounted payback period?

expected cash flows:

Year	Project Cash Flow
0	- $180 million
1	90 million
2	65 million
3	100 million
4	100 million

The Project's discounted payback period is ____

Answer 1

year discounted cash flow cumulative discounted cash flow

0 (180 m) (180 m)

1 90 m / (1.11) = 81.0811 ( 98.9189) [ 180 m -81.0811]

2 65 m / (1.11)² = 52.7555 (43.8366) [ 180 m - 81.0811 -52.7555]

3 100 m / (1.11)³ = 73.1191 (26.9557) [ 180 m - 81.0811 - 52.7555 - 26.9557 ]

4 100 m / (1.11)⁴ = 65.8731 46.6654 [ 180 m - 81.0811 - 52.7555 - 26.9557- 65.8731]

discounted payback period = 3 + (26.9557 / 65.8731) =3.041 years