A project has an initial cost of $18,400 and expected cash inflows of $7,200, $8,900, and $7,600 over Years 1 to 3, respectively. What is the discounted payback period if the required rate of return is 13.5 percent

2.99 years

Explanation:

Discounted payback calculated how long it takes to recover the amount invested in a project from its discounted cash flows.

Amount invested = $-18,400

Discounted cash flow in year 1 = 7200 / 1.135 = $6,343.61

Discounted cash flow in year 2 = 8900 / 1.135^2 = $6908.73

Discounted cash flow in year 3 = 7600 / 1.135^3 = $5197.88

in year 1, the amount recovered = $-18,400 +  $6,343.61 = $-12,056.39

in year 1, the amount recovered = $-12,056.39 +  $6908.73 = $-5147.66

in year 1, the amount recovered = $-5147.66 + $5197.88 = $50.2

the payback period = 2 years + $-5147.66 /  $5197.88 = 2.99 years

answer; i believe the correct answer is (business necessity defense;

due to the changes the federal reserve is making the unused reserves will impact the economy by them facing inflation. inflation is definfed as the increase in pricing of a good or service but the decline of the value of money used for purchasing those items. when the economy has a high inflation rate, they are subject to money loss and hurt on the economy.