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Which investment rule may not use all possible cash flow in its calculations npv payback period or irr?
Wiki User
∙ 12y ago
payback period
Wiki User
∙ 12y ago
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What is the formula for the payback period?
Formula for the Payback Period. Payback period = Initial investment / Annual Cash inflows
What is meant by the payback period?
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.
How is discounted payback period computed?
Payback period = Net Investment Annual cash returns
Payback period concept is best explained by what?
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 Pay back period method?
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.
Criticism of payback period?
The basic criticisms of the payback period method are that it does not measure the profitability of an investment and it does not consider the time value of money.
What is payback method on investment appraisal?
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.
How do you calculate a payback period?
The payback period is ascertained by calculating the number of years needed to recover the cash invested in a project, For example, an investment of 1000 provides a return of 200,300,500 in consecutive three years. Then total of return in 3 years will be equal to the original investment. Hence the payback period is three years.
How to compute discounted payback period?
What is the payback period of the following project? Initial Investment: $50,000 Projected life: 8 years Net cash flows each year: $10,000
Discounted payback method?
A discounted payback method is a formula that is used to calculate how long to recoup investments based on the discounted cash flows of the investment. It is a variation of payback period or the time it takes to recover a project investment given the discounted cash flow it has.
What does payback period mean?
It means, how long will it take to recover the money from the investment - the break-even point.
What is a payback period?
payback period , it is to pay your period on time jajajaja
