Discounted Payback Period Formula

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Discounted Payback Period Formula. DPP W dfrac B F DPP W FB W Last period where the whole discounted cash flow goes to investment recovery B Remaining balance of the initial investment to be recovered. Discounted Payback Period 4 abs -920 1419 465 Interpretation of the Results Option 1 has a discounted payback period of 507 years option 3 of 465 years while with option 2 a recovery of the investment is not achieved.

Discounted Payback Period Vs Payback Period Soleadea
Discounted Payback Period Vs Payback Period Soleadea from soleadea.org

A Last year of negative cumulative cash flow or net present value. However the discounted payback period would look at each of those 1000 cash flows based on its present value. The payback period is the amount of time usually measured in years it takes to recover an initial investment outlay as measured in after-tax cash flowsIt is an important calculation used in.

To calculate the discounted payback period firstly we need to calculate the discounted cash inflow for each period using the following formula.

Amount invested Average annual cash flows. Discounted Payback Period DPP A B C Where A - Last period with a negative discounted cumulative cash flow B - Absolute value of discounted cumulative cash flow at the end of the period A C - Discounted cash flow during the period after A. Working Example and. Amount invested Average annual cash flows.