An investment project has an initial cost of $260 and cash flows $75, $105, $100, and $50 for Years 1 to 4, respectively. The cost of capital is 12 percent. What is the discounted payback period

It will take 2 years and 292 days.

Explanation:

Giving the following information:

An investment project has an initial cost of $260 and cash flows $75, $105, $100, and $50 for Years 1 to 4.

The payback method of project analysis calculates the time necessary for a series of cash flows to "payback" the initial investment.

Io = - 260

Year 1 = 75 = - 185

Year 2 = 105 = - 80

Year 3 = 100 = 20

To calculate the number of days:

Days = (80/100) * 365 = 292

It will take 2 years and 292 days.