Respuesta :
The Discount rate is : Zero percent: payback in 3.49 years.
What is Discounted Payback Period?
The discounted payback period (DPP) is a method applied in the capital budgeting process to determine the number of periods an investor has to wait to be compensated the initial cost of a project from the projected cash inflows. DPP recognizes the time value of money theory hence it is classified as a discounting method of capital budgeting. The future cash inflows are discounted to their present worth before the discounted payback period is computed.
Given:
Costs = $10,000
Annual cash flows = $2,860
n =6 years.
r =0%
Solution-
Discount rate is zero we are doing the payback period
[tex]Payback in Year =\frac{investment}{cash flow per year}[/tex]
[tex]10,000 / 2860 Per Year = 3.4965[/tex]
Therefore, we can conclude that The Discount rate is : Zero percent: payback in 3.49 years.
Learn more about The Discount rate on:
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