4. Discounted payback [LO 9.3] Concerning discounted payback:

1. Describe how the discounted payback period is calculated, and describe the information this measure provides about a sequence of cash flows. What is the discounted payback criterion decision rule?

2. What are the problems associated with using the discounted payback period to evaluate cash flows?

3. What conceptual advantage does the discounted payback method have over the regular payback method? Can the discounted payback ever be longer than the regular payback? Explain.