You are looking at a new project and you have estimated the following cash flow...
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You are looking at a new project and you have estimated the following cash flows and net profit (in million $):
– Year 0: Cash Flow (CF) = -$ 75 (Initial outlay/cost)
– Year 1: Cash Flow (CF) = $ 50; Net income (NI) = $ 10
– Year 2: Cash Flow (CF) = $ 70; Net income (NI) = $ 15
– Year 3: Cash Flow (CF) = $ 40; Net income (NI) = $ 20
– Year 4: Cash Flow (CF) = $ 30; Net income (NI) = $ 10
– Year 5: Cash Flow (CF) = $ 20; Net income (NI) = $ 5
Average Book Value of Investment (in million $) is $ 50.
Your required return for assets of this risk is 30%.
What is the Discounted Payback Period for the project?
Give the answer in years, rounding to the nearest unit, with no decimal places (e.g., if the answer would be 3.234 years, give 3; or if the answer would be 4.562 years, give 5).
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