Jennifer
Nick
$3,982,048
Correct!
Will the discounted payback
period be shorter or longer than
the payback period calculated
earlier?
Monster Beverage is considering purchasing a new canning machine.
This machine costs $3,500,000 up front.
Required return = 11.3%
I
Year
Cash Flow
Discounted Cash Flow
0
$-3,500,000
$-3,500,000
1
$1,000,000
$898,473
2
$1,200,000
$968,704
3
$1,300,000
$942,883
4
$900,000
$586,492
5
$1,000,000
$585,496
They will be the same length.
Shorter
Longer
Submit