For Chapter 5 of Corporate Finance Global edition by bearley problem 8.

In the computation of the discounted payback period, how

come 264.64/3005.26 was computed instead of -264.64

Step 15 of 19 Calculate the discounted payback period of the Project B as follows: 1 Year Particular Amount PVF 2 10% PV of the amount Creative caldows 2 O Cash flows $2,000.00 10000 -$2,000.00 -$2,000.00 3 Cash flows 51.000.00 0 9091 $909 09 $1.090 91 4 2 Cash flows $1,000.00 0.8264 5826.45 $264.46 5 3 Cash flows $4.000.00 0.7513 $3,005. 26 52.740 80 4 Cash flows $1,000.00 0.6830 5683 01 $3.423 81 7 Cash flows $1,000.00 062091 5620 921 $4,044.73 Formulas: Comment Computation of discounted payback period of the project B is as follows: Discounted Payback period Years before investment is Recovered + Remaining Present Value of Cash Flow to be recovered Full Present Value of Cash Flow in such Year - 2 Years $264.64 *53,005.26 = 2.088 Years Hence, the discounted payback period of project Bis 2.09 Years Comments (1) Anonymous In the computation of the discounted payback period, how come 264.64/3005.26 was computed instead of -264.64