Pay back period (pbp) , Financial Management

Assignment Help:

Pay Back Period (PBP) :

This is the most popular method employed by industrial practitioners for ranking investment projects. This is described as the "period required for a proposal's initial cash outlay to be recovered by future additional cash savings generated from the proposal". The cash flow (after tax & depreciation) is used in calculating the payback period.

PBP = CO/CF

Where CO = cash outflow of the project and  CF = cash inflow

When the cash gains produced by the project are unevenly distributed, cumulative cash gains resulting from the project are to be calculated until the year in which the running total is similar to the amount of investment outlay.


Related Discussions:- Pay back period (pbp)

Shareholders versus managers, Shareholders versus Managers A Limited Li...

Shareholders versus Managers A Limited Liability company is possessed by the shareholders though in most of the cases is managed by a board of directors selected by the shareho

Decentralization, Decentralization This is a company power structure i...

Decentralization This is a company power structure in which authority and decision-making responsibility are diffused throughout various stages of an organization. Decentraliz

Explain why the company would probably not issue $1 million, Refer to the B...

Refer to the Bulldog battery company's cash budget in Table 18-7.  Explain why the company would probably not issue $1 million worth of new common stock in January to avoid all sho

Double declining balance method , Suppose that the business uses the double...

Suppose that the business uses the double declining balance method to depreciate  its equipment (a)  Determine the net book value, depreciation expense, and accumulated deprecia

Debt and coverage ratios, The ability of a firm to satisfy its debt o...

The ability of a firm to satisfy its debt obligations can be assessed using three sets of ratios: Short-term solvency ratios Capitalization

Agency mortgage-backed securities, Agency Mortgage-Backed Securities ...

Agency Mortgage-Backed Securities (AMBS) are securities that are backed by the mortgage loans. These securities include mortgage passthrough securities, stripped

Special considerations for high-yield corporate bonds, High-yield ...

High-yield bonds are issued by organizations that do not qualify for "investment-grade" ratings by any one of the leading credit rating agencies

Explain compound value of an annuity, Q. Explain Compound Value of an Annui...

Q. Explain Compound Value of an Annuity? Compound Value of an Annuity: - Annuity demotes to the periodic flows of equal amounts. FV = A {(1+i)n - 1}/i Instance: - Mr. X i

Why do analysts calculate financial ratios, Why do analysts calculate finan...

Why do analysts calculate financial ratios? Ratios are comparative measures.  For the reason that the ratios show relative value, they permit financial analysts to compare inf

Define the term- profit, Define the term- profit The term "profit" can ...

Define the term- profit The term "profit" can be used in two senses. As an owner-oriented concept it refers to amount and share of national income that is paid to owners of bus

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