Discounted Cash Flows Example: You plan to buy a machine that will cost $2,000 today and produce the following cash flows: $500 in year 1, $750 in year 2, $300 in year 3, $1,000 in year 4, and $5,000 in year 5. Our firm only accepts projects with a discounted payback of 4 years or less. The cost of capital is 20%. Should you purchase the machine?