Discounted payback period. Given the following two projects and their cash flows, calculate the discounted payback period with a discount rate of 5%, 10%, and 15%. What do you notice about the payback period as the discount rate rises? Explain this relationship. Cash Flow A B Cost $11,000 $90,000 Cash flow year 1 $3,929 $9,000 Cash flow year 2 $3,929 $18,000 Cash flow year 3 $3,929 $27,000 Cash flow year 4 $3,929 $36,000 Cash flow year 5 $3,929 $13,500 Cash flow year 6 $3,929 $0

Discounted payback period. Given the following two projects and their cash flows, calculate the discounted payback period with a discount rate of 5%, 10%, and 15%. What do you notice about the payback period as the discount rate rises? Explain this relationship. Cash Flow A B Cost $11,000 $90,000 Cash flow year 1 $3,929 $9,000 Cash flow year 2 $3,929 $18,000 Cash flow year 3 $3,929 $27,000 Cash flow year 4 $3,929 $36,000 Cash flow year 5 $3,929 $13,500 Cash flow year 6 $3,929 $0

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 16EB: Project Y cost $8,000 and will generate net cash inflows of $1,500 in year one, $2,000 in year two,...

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Cash Flow	A	B
Cost	$11,000		$90,000
Cash flow year 1	$3,929		$9,000
Cash flow year 2	$3,929		$18,000
Cash flow year 3	$3,929		$27,000
Cash flow year 4	$3,929		$36,000
Cash flow year 5	$3,929		$13,500
Cash flow year 6	$3,929		$0