Lew Iss See Kay LLP (LISKL) is currently evaluating an investment in a new comedy club. The club is expected to last for 4 years and generate a CF1 = $11,000, CF2 = $9,680, CF3 = $10,648, and CF4 = $45,454. The initial outlay is $20,000. Suppose a company has proposed a new 4-year project. The project has an initial outlay of $66,000 and has expected cash flows of $19,000 in year 1, $23,000 in year 2, $28,000 in year 3, and $34,000 in year 4. The required rate of return is 12% for projects at this company. What is the discounted payback for this project?

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 2PA: Jasmine Manufacturing is considering a project that will require an initial investment of $52,000...
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Lew Iss See Kay LLP (LISKL) is currently evaluating an investment in a
new comedy club. The club is expected to last for 4 years and generate a
CF1 = $11,000, CF2 = $9,680, CF3 = $10,648, and CF4 = $45,454. The
initial outlay is $20,000.
Suppose a company has proposed a new 4-year project. The project has an
initial outlay of $66,000 and has expected cash flows of $19,000 in year 1,
$23,000 in year 2, $28,000 in year 3, and $34,000 in year 4. The required rate
of return is 12% for projects at this company.
What is the discounted payback for this project?
Transcribed Image Text:Lew Iss See Kay LLP (LISKL) is currently evaluating an investment in a new comedy club. The club is expected to last for 4 years and generate a CF1 = $11,000, CF2 = $9,680, CF3 = $10,648, and CF4 = $45,454. The initial outlay is $20,000. Suppose a company has proposed a new 4-year project. The project has an initial outlay of $66,000 and has expected cash flows of $19,000 in year 1, $23,000 in year 2, $28,000 in year 3, and $34,000 in year 4. The required rate of return is 12% for projects at this company. What is the discounted payback for this project?
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