Answer :
Final answer:
The discounted payback period is 5 years for the given project.
Explanation:
The discounted payback period is the time it takes to recover the initial investment in a project, taking into account the discounted cash flows. To calculate the discounted payback period, we need to determine when the cumulative discounted cash flows equal or exceed the initial investment.
In this case, the initial investment is -$9000 and the discount rate is 5%. We calculate the discounted cash flows for each year using the present value formula and find that the cumulative discounted cash flows equal -$8620 after the fifth year. Therefore, the discounted payback period is 5 years.
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