Problem:
Your firm is considering an investment that will cost $750,000 today. The investment will produce cash flows of $250,000 in year 1, $300,000 in years 2 through 4, and $100,000 in year 5.
Required:
Question: What is the investment's discounted payback period if the required rate of return is 10%?
- 3.33 years
- 3.16 years
- 2.67 years
- 2.33 years
Note: Please show how you came up with the solution.