The discounted payback period of Project Alpha is between 3 and 4 years. Workings

Project Alpha

                Year                    Cash flow                  Discount factor                PV                     Cum. PV

                                                $                                 10%                            $                             $

                  0                       (800,000)                       1.000                      (800,000)                (800,000)

                  1                       250,000                          0.909                      227,250                  (572,750)

                  2                       250,000                         0.826                       206,500                  (366,250)

                 3                        400,000                         0.751                        300,400                 (65,850)

                 4                        300,000                         0.683                        204,900                 139,050

                 5                        200,000                         0.621                       124,200                   263,250

                 6                        50,000                           0.564                        28,200                    291,450

The discounted payback period is therefore between three and four years.