what is the discounted payback period 
the discounted payback period is a capital budgeting procedure used to determine the profitability of a project a discounted payback period gives the number of years it takes to break even from undertaking the initial expenditure by discounting future cash flows and recognizing the time value of money the metric is used to evaluate the feasibility and profitability of a given project the more simplified payback period formula which simply divides the total cash outlay for the project by the average annual cash flows doesn t provide as accurate of an answer to the question of whether or not to take on a project because it assumes only one upfront investment and does not factor in the time value of money investopedia matthew collinsunderstanding the discounted payback period