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QUESTION 10 Suppose a company has proposed a new year project. The project has an initial outlay of So,000 and has expected c
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Answer #1
Year Cash flow Present value factor Discounted Cash Flow Cumulative Discounted Cash Flow
0 (69,000.00)                       1.00000                     (69,000.00)                                           (69,000.00)
1    20,000.00                       0.89286                       17,857.14                                           (51,142.86)
2    25,000.00                       0.79719                       19,929.85                                           (31,213.01)
3    28,000.00                       0.71178                       19,929.85                                           (11,283.16)
4    34,000.00                       0.63552                       21,607.61                                             10,324.45
Hence, discounted payback period = 3+11283.2/21607.61 = 3.52 years
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