The discounted payback period is generally considered superior to the payback period. By using the former, management would never pick a project with a negative net present value (NPV).
Added by Melissa B.
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What is the discounted payback period? - The discounted payback period is a financial metric that calculates the time it takes for a project to generate enough cash flows to recover the initial investment, taking into account the time value of money. Show more…
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A project manager is using the payback method to make the final decision on which project to undertake. The company has a 12% required rate of return and expects a 2% rate of inflation for the next three years. What is the a) non-discounted payback and b) discounted payback period? Do up to 2 decimal points. No Decimal for $ values Year | Cash flow | Non Discounted Residual | Discounted value | Residual --- | --- | --- | --- | --- 0 | ($250,000) | ($250,000) | | 1 | $70,000 | | | 2 | $80,000 | | | 3 | $90,000 | | | 4 | $140,000 | | | | | Payback period | | | PB Period Put numbers in shaded areas. $ values and Paypack period 3 With same amount of investment and rate of return, which project seems better than the others?
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A project costs $25,000 and is expected to return cash flows of $8,500 per year for five years and then be worthless. What is the payback period for this project? Group of answer choices 1.9 years 2.1 years 2.9 years 1.2 years
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1. You are the project manager for a new project, Project A. You have cost estimates of $5,000 in the first year and no costs in later years. There are no benefits in the first year. Benefit estimates are for $1,000, $2,000, $3,000, and $4,000 in years 2, 3, 4 and 5 respectively. Your company uses a discount rate of 10%. Given the above data: a. What is the NPV of Project A? b. What is the ROI of Project A? c. What is the payback period for Project A? Please show your work.
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