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Discounted Payback Period Formula

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Discounted Payback Period is a capital budgeting procedure used to determine the profitability of a project. Check FAQs

DPP = \frac{\ln (\frac{1}{1 - (\frac{Initial Invt \cdot DR}{PCF})})}{\ln (1 + DR)}

DPP - Discounted Payback Period?Initial Invt - Initial Investment?DR - Discount Rate?PCF - Periodic Cash Flow?

Discounted Payback Period Example

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Here is how the Discounted Payback Period equation looks like with Values.

Here is how the Discounted Payback Period equation looks like with Units.

Here is how the Discounted Payback Period equation looks like.

0.0593 = \frac{\ln (\frac{1}{1 - (\frac{2000 \cdot 12}{170000})})}{\ln (1 + 12)}

0.0593 = \frac{\ln (\frac{1}{1 - (\frac{2000 \cdot 12}{170000})})}{\ln (1 + 12)}

0.0593 = \frac{\ln (\frac{1}{1 - (\frac{2000 \cdot 12}{170000})})}{\ln (1 + 12)}

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Discounted Payback Period Solution

Follow our step by step solution on how to calculate Discounted Payback Period?

FIRST Step Consider the formula

DPP = \frac{\ln (\frac{1}{1 - (\frac{Initial Invt \cdot DR}{PCF})})}{\ln (1 + DR)}

Next Step Substitute values of Variables

∴

DPP = \frac{\ln (\frac{1}{1 - (\frac{2000 \cdot 12}{170000})})}{\ln (1 + 12)}

Next Step Prepare to Evaluate

∴

DPP = \frac{\ln (\frac{1}{1 - (\frac{2000 \cdot 12}{170000})})}{\ln (1 + 12)}

Next Step Evaluate

∴

DPP = 0.0593352125644093

LAST Step Rounding Answer

∴

DPP = 0.0593

Discounted Payback Period Formula Elements

Variables

Functions

Discounted Payback Period

Discounted Payback Period is a capital budgeting procedure used to determine the profitability of a project.

Symbol: DPP

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Discounted Payback Period

Initial Investment

The Initial Investment is the amount required to start a business or a project.

Symbol: Initial Invt

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Initial Investment

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.

Symbol: DR

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Discount Rate

Periodic Cash Flow

Periodic Cash Flow is the net amount of cash and cash-equivalents moving into and out of a business.

Symbol: PCF

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Periodic Cash Flow

The natural logarithm, also known as the logarithm to the base e, is the inverse function of the natural exponential function.

Syntax: ln(Number)

Other formulas in Capital Budgeting category

Go Payback Period

PBP = \frac{Initial Invt}{C f}

Go Cost of Retained Earnings

C RE = (\frac{D}{P c}) + g

Go Cost of Debt

R d = Int.E \cdot (1 - T r)

Go After-Tax Cost of Debt

ATCD = (R f + CS P) \cdot (1 - T r)

How to Evaluate Discounted Payback Period?

Discounted Payback Period evaluator uses Discounted Payback Period = ln(1/(1-((Initial Investment*Discount Rate)/Periodic Cash Flow)))/ln(1+Discount Rate) to evaluate 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 evaluate Discounted Payback Period using this online evaluator? To use this online evaluator for Discounted Payback Period, enter Initial Investment (Initial Invt), Discount Rate (DR) & Periodic Cash Flow (PCF) and hit the calculate button.

FAQs on Discounted Payback Period

What is the formula to find Discounted Payback Period?

The formula of Discounted Payback Period is expressed as Discounted Payback Period = ln(1/(1-((Initial Investment*Discount Rate)/Periodic Cash Flow)))/ln(1+Discount Rate). Here is an example- 0.059335 = ln(1/(1-((2000*12)/170000)))/ln(1+12).

How to calculate Discounted Payback Period?

With Initial Investment (Initial Invt), Discount Rate (DR) & Periodic Cash Flow (PCF) we can find Discounted Payback Period using the formula - Discounted Payback Period = ln(1/(1-((Initial Investment*Discount Rate)/Periodic Cash Flow)))/ln(1+Discount Rate). This formula also uses Natural Logarithm (ln) function(s).

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Discounted Payback Period Formula

Discounted Payback Period Example

Discounted Payback Period Solution

Discounted Payback Period Formula Elements

Other formulas in Capital Budgeting category

How to Evaluate Discounted Payback Period?

FAQs on Discounted Payback Period

Variable Name