Discount payback method to calculate the payback period

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1. Selecting, buying, and selling stocks, bonds, and other financial instruments are important to personal financial planning. The Wilson Family has been investing $2,000 annually in an IRA for the past 6 years, which is invested in a portfolio of mutual fund. The average return on stocks since 1926 has been about 10%. How much will the IRA be worth in 7.2 years? 1. $16,974 2. $33,949 3. $53,439 4. None of the above

2. Use the discount payback method to calculate the Payback period.

WACC 10%.

year 0 1 2 3

Cash Flow $-1000 $450 $ 450 $450

2.41 Years

2.36 Years

2.22 Years

2.64 Years

Reference no: EM131962244

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