year 0 1

Initial investment -1000000 0

Sales revenue 1200000
Costs 1000000
Profit before tax 200000
Tax 100000
After tax income 100000
Add: Depreciation 200000
add:Tax expense 100000
Less: tax payment
Working capital -600000
Cash flow -1600000 400000
Cumulative cash flow -1600000 -1200000

Payback period 4 years

NPV @ 10% $ 186,105.02

Payback period tells the period in which the initial investment is recovered.
Net present value tells the net worth of the project on the present day.
 2 3 4 5
0 0 0 0
1400000 1400000 1400000 1400000
1100000 1100000 1100000 1100000
300000 300000 300000 300000
150000 150000 150000 150000
150000 150000 150000 150000
200000 200000 200000 200000
150000 150000 150000 150000
100000 150000 150000 150000
600000
400000 350000 350000 950000
-800000 -450000 -100000 850000