1. Using the information given below compute the Payback Period under Discounted Payback Period method and comment.

Initial outlay: `80,000 Estimated life : 5 years Year 1 2 3 4 5 PAT(`) 6,000 14,000 24,000 16,000 Nil Depreciation has been calculated under SLM. The cost of capital may be taken at 20%

p.a. and the P.V of `1 at 20% p.a. is given below:

Year 1 2 3 4 5 PV factor 0.83 0.69 0.58 0.48 0.40