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The internal rate of return and the payback period are two factors that are considered during the course of budget planning. Sometimes these two factors will coincide, other times they will contradict. Both of these methods do not show the true value of a proposed project, which is why it is valuable to use both equations when budgeting.
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Adavntages of using payback period?
advantages of payback period?
What is the difference between payback and discounted payback?
Simple payback method do not care about the time-value of money principle while discounted payback period do take care of this principle in calculation.
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
What is the typical payback period for a HELOC (Home Equity Line of Credit)?
The typical payback period for a HELOC (Home Equity Line of Credit) is around 5 to 10 years, depending on the amount borrowed and the repayment terms.
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.
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
Adavntages of using payback period?
advantages of payback period?
When you are calculating payback period do you subtract the salvage value?
No, when calculating the payback period, you do not subtract the salvage value. The payback period focuses on the time it takes for an investment to generate cash inflows sufficient to recover the initial investment cost. The salvage value is typically considered in other analyses, such as calculating the net present value (NPV) or internal rate of return (IRR), but not in the payback period calculation.
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
What techniques are there for capital budgeting?
A capital budget includes a payback period, the net present value, and the internal rate of return. It may also include a modified internal rate of return.
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 is the difference between payback and discounted payback?
Simple payback method do not care about the time-value of money principle while discounted payback period do take care of this principle in calculation.
