How do we calculate the payback period, Financial Management

Assignment Help:

How do we calculate the payback period for a proposed capital budgeting project? What are the major criticisms of the payback method?

We compute the payback period for a proposed project through adding a project’s positive cash flows, one period at a time, till the sum equals the basic investment. The figure of time periods it takes to cover this investment is the payback period.The major criticisms of the payback method are that cash flows later than the payback period are ignored and the time value of money is not considered.


Related Discussions:- How do we calculate the payback period

What is substantive test, what is Substantive tests or transactions based a...

what is Substantive tests or transactions based auditing Tests to attain audit evidence to detect material misstatements in financial statements. Using analytical procedures an

Bajaj Electronics, 1. How would you judge the potential profit of Bajaj Ele...

1. How would you judge the potential profit of Bajaj Electronics on the first year of sales to Booth Plastics and give your views to increase the profit?

Working capital, 5 Define risk. Examine the need for assessing the risks in...

5 Define risk. Examine the need for assessing the risks in a project.

Dividend policy, #questThe managing directors of three profitable listed co...

#questThe managing directors of three profitable listed companies discussed their companies'' dividend policies at a business lunch. Company A; has deliberately paid no dividends

Calculate the weighted average cost, XYZ Energy Solutions plc (XYZ) has spe...

XYZ Energy Solutions plc (XYZ) has spent €12m designing and developing a new generation of domestic air source heat pumps. These new domestic heat pumps can easily be fitted to exi

Types of finance functions/ decisions, TYPES OF FINANCE FUNCTIONS/ DECISION...

TYPES OF FINANCE FUNCTIONS/ DECISIONS The most main decisions in finance relate to procuring funds, investing them in profitable projects or assets, operate for the year and a

Describes net operating income approach to capital structure, Q. Describes ...

Q. Describes Net Operating Income Approach to Capital Structure? NOI (Net Operating Income Approach):- This is another speculation of capital structure which is propounded by '

Add or Drop Analysis, Lakespring Retirement Village is home to senior citiz...

Lakespring Retirement Village is home to senior citizens who are fairly independent but need assistance with basic health care and occasional meals. Jill Thompson, a licensed beaut

Financial ratios, How can we interpret financial ratios??

How can we interpret financial ratios??

Employees’ provident fund, Employees' Provident Fund (EPF) The Employee...

Employees' Provident Fund (EPF) The Employees' Provident Fund (EPF) Act, 1952 is the earliest legislation related to old age income security in India. It is a contributory prov

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd