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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.
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 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
How do you calculate payback period using bail-out method?
Initial Net Investment / (Annual expected cash flow + salvage value)
Why is the NPV method superior to the Payback method?
How is the method superior to the payback method
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.
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.
What is profit sensitivity analysis?
limitatios for profit sensitivity analysis
What is the advantage and disadvantage of discounted payback method?
we only know the disadvantages: The cash flows beyond the payback period are ignored..
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
