What minimum uniform period cash flow for a project in periods 2 through 9 is required...

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What minimum uniform period cash flow for a project in periods 2 through 9 is required...

What minimum uniform period cash flow for a project in periods 2 through 9 is required to make the discounted payback period be period 9 using an interest rate of 8.0 % if the year zero cash flow is -90,000 and the year one cash flow is -25,000?

business economics

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Answer 1

Answer #1

Equating the present value of all cash flows to zero:

i = 8%

minimum uniform period cash flow = A

0 = -90000 -25000/1.08 + A/1.08² + A/1.08³ + .... + A/1.08⁹

A/1.08² + A/1.08³ + .... + A/1.08⁹ = 113148.1

A = 21264.6

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Answer 2

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