18 months
What is the payback period of the following project? Initial Investment: $50,000 Projected life: 8 years Net cash flows each year: $10,000
Method of evaluating investment opportunities and product development projects on the basis of the time taken to recoup the investment. This period is compared to the required payback period to determine the acceptability of the investment proposal. In contrast to return on investment and net present value methods, the cash inflows occurring after the payback period are not included in this method. Formula: Payback period (in years) = Initial capital investment ÷ Annual cash-flow from the investment.
Payback period method is the strategy used to calculate the amount of time that a given investment will take to recover the initial cost. The amount of time will help in deciding whether the project is viable or not. The shorter the period the more viable the project.
A technique for determining if and when an investment will pay for itself.
Disadvantages of Payback Method: It may lead to excessive investment in short term projects. The choice of any cut-off payback period by an organization is arbitrary.
Formula for the Payback Period. Payback period = Initial investment / Annual Cash inflows
Payback period is the time in which the initial cash outflow of an investment is expected to be recovered from the cash inflows generated by the investment. It is one of the simplest investment appraisal techniques.
What is the payback period of the following project? Initial Investment: $50,000 Projected life: 8 years Net cash flows each year: $10,000
Method of evaluating investment opportunities and product development projects on the basis of the time taken to recoup the investment. This period is compared to the required payback period to determine the acceptability of the investment proposal. In contrast to return on investment and net present value methods, the cash inflows occurring after the payback period are not included in this method. Formula: Payback period (in years) = Initial capital investment ÷ Annual cash-flow from the investment.
Initial Net Investment / (Annual expected cash flow + salvage value)
using payback period as the primary metric for decision making. The payback period measures the length of time it takes for the initial investment to be recovered from the project's cash flows. This method disregards the time value of money and does not account for the profitability or net present value of the investment.
Payback period = Net Investment Annual cash returns
In payback period of investment appraisal method all cash inflows and outflows are analysed and find out that in how many years investment proposal will earn the invested money.
Payback period method is the strategy used to calculate the amount of time that a given investment will take to recover the initial cost. The amount of time will help in deciding whether the project is viable or not. The shorter the period the more viable the project.
Something is meant by the payback period. It is the length of time taken to recover the cost of an investment. This is what is meant by the payback period.
1. Payback period is an evaluating tool of any business capital expenditure that how much time it requires to fully recover the initial investment in any project for example: if a project require 100 investment and returns as follows: Year 1 60 year 2 20 year 3 20 year 4 10 so payback period to recover 100 is 3 years.
A technique for determining if and when an investment will pay for itself.