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It means, how long will it take to recover the money from the investment - the break-even point.

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What two pieces of information does the payback period convey that are not conveyed by the other methods?

The payback period provides information on how long it takes to recover the initial investment and helps in assessing the liquidity risk associated with the investment. It also gives a simple measure of project risk by focusing on the time it takes to recoup the investment.


Why is the method with the shortest payback time not always the best one to choose?

The method with the shortest payback time may not always be the best choice because it may not take into account long-term profitability, risk, or other important factors. It's important to consider the overall impact on the business and whether the investment aligns with the company's strategic goals and financial health in the long run. Choosing a method based solely on payback period may overlook these crucial aspects.


What is payback time in physics?

If you pay £6000 on double glazing windows and save £200 a year on heating bills then it would take 30 years for the double glazing to pay for itself the equation is: PAYBACK TIME = COST OF INSULATION / ANNUAL SAVING.


What is period mean in science?

In science, a period refers to a horizontal row of the periodic table of elements. Each period represents the number of electron shells in an atom's structure.


How long does it take for a wind generatorl to pay for itself?

The payback period for a wind generator can vary depending on factors like the cost of installation, local wind conditions, and energy prices. On average, it can take 6 to 15 years for a residential wind turbine to pay for itself through energy savings. Commercial-scale wind generators may have shorter payback periods due to higher energy production.

Related Questions

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?


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


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.


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.


What is the advantage and disadvantage of discounted payback method?

we only know the disadvantages: The cash flows beyond the payback period are ignored..