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Homer is considering a project with cash inflows of $950 a year for Years 1 to 4, respectively. The project has a required discount rate of 11 percent and an initial cost of $2,100. What is the discounted payback period

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Answer:

2.68 years

Explanation:

The discounted payback period measures how long it takes for the amount invested in a project to be recovered from the discounted cumulative cash flows.

Explanations on how the payback period is calculated can be found in the attached image.

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Based on the information given, the discounted payback period will be 2.68 years.

It should be noted that a discounted payback period is simply used to measure how long it will take for the amount that is invested in a project to be recovered.

Based on the information given, the computation will be:

= 2 + (473.10 / 694.63)

= 2 + 0.68

= 2.68 years.

In conclusion, the correct option is 2.68 years.

Learn more about payback period on:

https://brainly.com/question/25534287

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