how do I solve for the discounted cash flow given the table below. I will need s

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how do I solve for the discounted cash flow given the table below. I will need step by step instructions.

Calculation of Conventional Payback period: Year 0 Year 1 Year 2 Year 3 Expected cash flows ($4,500,000) $   1,800,000 $3,825,000 $1,575,000 Cumulative Cash flows ($4,500,000) ($2,700,000) $1,125,000 $2,700,000 We can see that cumulative cash flows become positive in year 2 , hence Payback period is = 1 year + (2700000 / 3825000) =                  1.71 Years Calculation of Conventional Payback period: Year 0 Year 1 Year 2 Year 3 Expected cash flows ($4,500,000) $   1,800,000 $3,825,000 $1,575,000 PVF (7%) Discounted Cash flows ? Cumulative Discounted Cash flows? We can see that cumulative Discounted cash flows become positive in year 2 , hence Payback period is = 1 year + = Years

Explanation / Answer

Present value of year 1 cash flow = 1,800,000 / ( 1 + 0.07)1

Present value of year 1 cash flow = $1,682,242.991

Present value of year 2 cash flow = 3,825,000 / ( 1 + 0.07)2

Present value of year 2 cash flow = 3,825,000 / 1.1449

Present value of year 2 cash flow = $3,340,903.136

Present value of year 3 cash flow = 1,575,000 / ( 1 + 0.07)3

Present value of year 3 cash flow = 1,575,000 / 1.225043

Present value of year 3 cash flow = $1,285,669.156

Cumulative cash flow for year 0 = -4,500,000

Cumulative cash flow for year 1 = -4,500,000 + 1,682,242.991 = -2,817,757.009

Cumulative cash flow for year 2 = -2,817,757.009 + 3,340,903.136 = 523,146.127

Cumulative cash flow for year 3 = 523,146.127 + 1,285,669.156 = $1,808,815.283

2,817,757.009 / 3,340,903.136 = 0.84

Payback period = 1 + 0.84 = 1.84 years

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