Engineering Board Exam Reviewer · Benefit-Cost Ratio and Payback Period · medium
An investment of P100,000 returns P30,000 at the end of each year. At 10% interest, what is the discounted payback period?
- 4.25 years
- 3.33 years
- 4 years
- 5 years
Answer
A. 4.25 years
Solution
100,000=30,000(P/A,10%,n) (1.10)-n=1- 100,000(0.10)30,000=0.6667. So n=- 0.6667/ 1.10=4.25 years.
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