Discounted Payback Period Solution

STEP 0: Pre-Calculation Summary
Formula Used
Discounted Payback Period = ln(1/(1-((Initial Investment*Discount Rate)/Periodic Cash Flow)))/ln(1+Discount Rate)
DPP = ln(1/(1-((Initial Invt*DR)/PCF)))/ln(1+DR)
This formula uses 1 Functions, 4 Variables
Functions Used
ln - The natural logarithm, also known as the logarithm to the base e, is the inverse function of the natural exponential function., ln(Number)
Variables Used
Discounted Payback Period - Discounted Payback Period is a capital budgeting procedure used to determine the profitability of a project.
Initial Investment - The Initial Investment is the amount required to start a business or a project.
Discount Rate - Discount Rate is the interest rate charged to commercial banks and other depository institutions for loans received from the Federal Reserve Bank’s discount window.
Periodic Cash Flow - Periodic Cash Flow is the net amount of cash and cash-equivalents moving into and out of a business.
STEP 1: Convert Input(s) to Base Unit
Initial Investment: 2000 --> No Conversion Required
Discount Rate: 12 --> No Conversion Required
Periodic Cash Flow: 170000 --> No Conversion Required
STEP 2: Evaluate Formula
Substituting Input Values in Formula
DPP = ln(1/(1-((Initial Invt*DR)/PCF)))/ln(1+DR) --> ln(1/(1-((2000*12)/170000)))/ln(1+12)
Evaluating ... ...
DPP = 0.0593352125644093
STEP 3: Convert Result to Output's Unit
0.0593352125644093 --> No Conversion Required
FINAL ANSWER
0.0593352125644093 0.059335 <-- Discounted Payback Period
(Calculation completed in 00.004 seconds)

Credits

Created by Team Softusvista
Softusvista Office (Pune), India
Team Softusvista has created this Calculator and 600+ more calculators!
Verified by Himanshi Sharma
Bhilai Institute of Technology (BIT), Raipur
Himanshi Sharma has verified this Calculator and 800+ more calculators!

12 Capital Budgeting Calculators

Overall Cost of Capital
Go Overall Cost of Capital = (Market Value of the Firm’s Equity)/(Market Value of the Firm’s Equity+Market Value of the Firm’s Debt)*Required Rate of Return+(Market Value of the Firm’s Debt)/(Market Value of the Firm’s Equity+Market Value of the Firm’s Debt)*Cost of Debt*(1-Tax Rate)
Discounted Payback Period
Go Discounted Payback Period = ln(1/(1-((Initial Investment*Discount Rate)/Periodic Cash Flow)))/ln(1+Discount Rate)
Net Present Value (NPV) for even cash flow
Go Net Present Value (NPV) = Expected Cash Flow*((1-(1+Rate of Return)^-Number of Periods)/Rate of Return)-Initial Investment
Capital Asset Pricing Model
Go Expected Return on Investment = Risk Free Rate+Beta on Investment*(Expected Return on Market Portfolio-Risk Free Rate)
Modified Internal Rate of Return
Go Modified Internal Rate of Return = 3*((Present Value/Cash Outlay)^(1/Number of Years)*(1+Interest)-1)
Cost of Retained Earnings
Go Cost of Retained Earnings = (Dividend/Current Stock Price)+Growth Rate
After-Tax Cost of Debt
Go After Tax Cost of Debt = (Risk Free Rate+Credit Spread)*(1-Tax Rate)
Terminal Value using Perpetuity Method
Go Terminal Value = Free Cash Flow/(Discount Rate-Growth Rate)
Accounting Rate of Return
Go Accounting Rate of Return = (Average Annual Profit/Initial Investment)*100
Payback Period
Go Payback Period = Initial Investment/Cashflow per Period
Terminal Value using Exit Multiple Method
Go Terminal Value = EBITDA at Last Period*Exit Multiple
Cost of Debt
Go Cost of Debt = Interest Expense*(1-Tax Rate)

Discounted Payback Period Formula

Discounted Payback Period = ln(1/(1-((Initial Investment*Discount Rate)/Periodic Cash Flow)))/ln(1+Discount Rate)
DPP = ln(1/(1-((Initial Invt*DR)/PCF)))/ln(1+DR)

How to Calculate Discounted Payback Period?

Discounted Payback Period calculator uses Discounted Payback Period = ln(1/(1-((Initial Investment*Discount Rate)/Periodic Cash Flow)))/ln(1+Discount Rate) to calculate the Discounted Payback Period, Discounted Payback Period is a capital budgeting procedure used to determine the profitability of a project. Discounted Payback Period is denoted by DPP symbol.

How to calculate Discounted Payback Period using this online calculator? To use this online calculator for Discounted Payback Period, enter Initial Investment (Initial Invt), Discount Rate (DR) & Periodic Cash Flow (PCF) and hit the calculate button. Here is how the Discounted Payback Period calculation can be explained with given input values -> 0.059335 = ln(1/(1-((2000*12)/170000)))/ln(1+12).

FAQ

What is Discounted Payback Period?
Discounted Payback Period is a capital budgeting procedure used to determine the profitability of a project and is represented as DPP = ln(1/(1-((Initial Invt*DR)/PCF)))/ln(1+DR) or Discounted Payback Period = ln(1/(1-((Initial Investment*Discount Rate)/Periodic Cash Flow)))/ln(1+Discount Rate). The Initial Investment is the amount required to start a business or a project, Discount Rate is the interest rate charged to commercial banks and other depository institutions for loans received from the Federal Reserve Bank’s discount window & Periodic Cash Flow is the net amount of cash and cash-equivalents moving into and out of a business.
How to calculate Discounted Payback Period?
Discounted Payback Period is a capital budgeting procedure used to determine the profitability of a project is calculated using Discounted Payback Period = ln(1/(1-((Initial Investment*Discount Rate)/Periodic Cash Flow)))/ln(1+Discount Rate). To calculate Discounted Payback Period, you need Initial Investment (Initial Invt), Discount Rate (DR) & Periodic Cash Flow (PCF). With our tool, you need to enter the respective value for Initial Investment, Discount Rate & Periodic Cash Flow and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.
Let Others Know
Facebook
Twitter
Reddit
LinkedIn
Email
WhatsApp
Copied!