Your firm has the opportunity to invest $75,000 in a new project opportunity but due to cash flow concerns, your boss wants to know when you can pay back the original investment. Using the discounted payback method, you determine that the project should generate inflows of $30,000, $30,000, $25,000, $20,000, and $20,000 respectively for an expected five years after completion of the project. Your firm's required rate of return is 10%. How long will it take to pay back the initial project investment

It will take the project 3 years 3.6 months to pay back the initial investment.

Explanation:

The discounted payback period is the length of time of time it will take the present value of the cash inflows to recoup its initial cost.

To compute the discounted payback period we will follow the steps below:

Step 1: Compute the present value

Compute the Present Value of the cash inflows

Year                                       Present Value    Cumulative PV

0                                               75,000                (75,000)

1          30,000 × 1.1^(-1)=         27272.72              (47,727.27)

2         30,000 × 1.1^(-2)  =       24793.38            (22,933.88)

3.         25,000 × 1.1^(-3)=      18782.87                (4,151.0)

4.          20,000 × 1.1^(4) =      13,660.26911

5.         20,000 ×  1.1^(-5)=      12,418.42646

Step 2 : compute the payback period using the present value of cash flows

Discounted payback period = 3 years + ( 4,150/13,660)× 12 months

                                               = 3 years 3.6 months

It will take the project 3 years 3.6 months to pay back the initial investment.

by knowing conditionality

explanation:

being born in poverty would limit the people's chances, opportunities and benefits.

this happen because of several things, such as:

- poor people tend to gain less access to good education and nutrition. this mean that their chance to obtain high paying jobs would also be limited.

- poor people tend to socialize with other poor people while the rich tend to socialize with other rich people. this means that simply throguh their social circle, rich people would have more business opportunities compared to the poor people.

- rich people tend to have more capital in their disposal. this would benefit them in business since it is far easier for them to fund their business operation compared to poor people.