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The payback period is easy to use, compute and it does give a certain amount of information concerning risk. The disadvantages though include the fact that it ignores the profability of an investment and it does not take into account time value of money (TVM).

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Adavntages of using payback period?

advantages of payback period?


What is a payback period?

payback period , it is to pay your period on time jajajaja


What is the formula for the payback period?

Formula for the Payback Period. Payback period = Initial investment / Annual Cash inflows


Payback period versus discounted payback period versus net present value versus profitability index?

discounted payback period


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.


Limitatios of payback period?

- the payback period is to dependent on cash inflows which are hard to predict. - The payback period only considers revenue, does not consider profits.


How is discounted payback period computed?

Payback period = Net Investment Annual cash returns


Advantage and disadvantage of payback?

There are a few different advantages and disadvantages of payback. Payback can help ensure that there is further action in a case for example.


Disadvantages of using roi payback method npv and irr and average profits?

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.


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.


Which investment rule may not use all possible cash flow in its calculations npv payback period or irr?

payback period


What are the advantages of using discounted payback period?

The discounted payback period offers several advantages, including a more accurate assessment of an investment's risk by accounting for the time value of money. This method helps investors understand how long it will take to recoup their initial investment in present value terms, providing a clearer picture of cash flow timing. Additionally, it aids in comparing different investment opportunities by allowing for a consistent evaluation of cash flows over time, which can lead to more informed decision-making.