System Analysis and Design20815 marksNumerical: discounted payback period NPVProcess of Initiating and Planning IS Development Projects,
An initial investment of Rs. 1,00,000 is required to start a company. The cash flow-in is Rs. 40,000 per year. Assuming interest rate as 10%, calculate the discounted payback period. (use Net Present Value)
An initial investment of Rs. 1,00,000 is required to start a company. The cash flow-in is Rs. 40,000 per year. Assuming interest rate as 10%, calculate the discounted payback period. (use Net Present Value) [5]
Parameter Value ------ Initial Investment Rs. 1,00,000 (outflow at Year 0) Annual Cash Inflow Rs. 40,000 per year Discount Rate ($i$) 10% = 0.10 --- $$PVn = \frac{Y}{(1+i)^n}$$ Year $n$ Discount Factor $\frac{1}{(1.10)^n}$ PV of Inflow (Rs.) --------- 1 0.90909 $40000 \times 0.90909 = 36{,}364$ 2...