answersLogoWhite

0

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.

User Avatar

Wiki User

13y ago

What else can I help you with?

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?


How do you calculate payback period for an asset?

assets value $200000and number of year five cash flow is 70000,80000, 90000,90000and100000.and depreciation are $40000 each year .find out payback period for each assets


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.


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

discounted 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.


What is payback period method?

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.


How is discounted payback period computed?

Payback period = Net Investment Annual cash returns


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.


How do you calculate payback period using bail-out method?

Initial Net Investment / (Annual expected cash flow + salvage value)


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.