Present value = 950 / (1 + 0.11)^{1} = 855.8559
Present value = 900 / (1 + 0.11)^{2} = 730.46019
Present value = 1000 / (1 + 0.11)^{3} = 731.191381
Cumulative cash flow for year 0 = -2100
Cumulative cash flow for year 1 = -2100 + 855.8559 = -1,244.1441
Cumulative cash flow for year 2 = -1,244.1441 + 730.46019 = -513.68391
Cumulative cash flow for year 3 = -513.68391 + 731.191381 = 217.51
513.68391 / 731.191381 = 0.70
Discounted payback period = 2 + 0.7 = 2.7 years
C. 2-3 years
Homer is considering a project with cash inflows of $950 in year 1, $900 in year...
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