Financial Management: Principles and Applications, 13/e

Long description

Project Long
	Annual cash flow	Cumulative Cash flow	Discounted Cash Flow	Cumulative Discounted Cash flow
Initial cash outlay	($100,000)	($100,000)	($100,000)	($100,000)
Year 1	70,000	(30,000)	59,829	(40,171)
Year 2	30,000	0	21,915	(18,256)
The text, The discounted payback period equals 2.97 years for Project Long. Three years of discounted cash flows sum to a positive $476. However, since we need to sum to 0, we do not need a full three years of discounted cash flows (we need $18,256/$18,731 = 0.97 of Year 3’s cash inflow) points to the  Year2 row.
Year 3	30,000	30,000	18,731	476
Year 4	25,000	55,000	13,341	13,817
Year 5	10,000	65,000	4,561	18,378

Project Short
	Annual cash flow	Cumulative ...