Discounted Payback Period - Basics, Formula, How to Calculate? (Step by Step)

Discounted Payback Period Chapters 00:00 Introduction 00:17 Payback Period Refresher 06:05 Limitation of Payback Period - Time Value of Money in Payback Period 07:36 Understanding Discounted Payback Period 10:02 Calculating Discounted Payback Period In this video, we discuss one of the methods of Capital Budgeting, Discounted Payback Period, along with how it works in project evaluations, its calculations, and its uses. What is a Discounted Payback Period?  Discounted Payback Period is the time taken to recover a business’ initial investment. The calculation is done after taking into account the time value of money and discounting future cash flows. Formula = Year Before the Discounted Payback Period Occurs + (Cumulative Cash Flow in Year Before Recovery / Discounted Cash Flow in Year After Recovery) Uses of Discounted Payback Period: 1. Considers Time Value of Money 2. Used mostly when an investor has comparable projects 3. The shorter the discounted payback period, the sooner the project generates cash inflows to recover the initial investments.  #discountedpaybackperiod, #wallstreetmojo, #discountedpaybackperiodformula For more details, you can refer to our article at https://www.wallstreetmojo.com/discou... Subscribe to Our Channel - Youtube ►    / @wallstreetmojo   LinkedIn ►   / mycompany   Facebook ►   / wallstreetmojo   Instagram ►   / wallstreetmojoofficial   Twitter ►   / wallstreetmojo