--%>
Assignment Help - homework help

Explain computing of payback period

How do we compute the payback period for proposed capital budgeting project? What are the basic criticisms of the payback method?
We compute the payback period for proposed project through adding a project's positive cash flows, one period at time, till the sum equals the initial investment. The number of time periods it takes to cover up this investment is the payback period. The basic criticisms of the payback method are that cash flows after the payback period are avoided and the time value of money is not assumed.

   Related Questions in Finance Basics

  • Q : What is the Character of Expenditure

    Character of Expenditure: A classification recognizing the major purpose of expenditure, like State Operations, Local Assistance, Capital Outlay, or Unclassified.

    		•
  • Q : What is Revenue Revenue : Any adding up

    Revenue: Any adding up to cash or other current assets which does not raise any liability or reserve and does not symbolize the reduction or recovery of expenditure (example, reimbursements or abatements). Revenues are a kind of receipt usually derive

    		•
  • Q : Describe price–quantity effects Normal

    Normal 0 false false

    		•
  • Q : Components of the M1 money supply

    Normal 0 false false

  • Q : Does high operating leverage mean high

    Does high operating leverage for all time mean high business risk? Describe. High operating leverage does not for all time mean high business risk. If the company's sales are fairly stable then the variation into operating income would be smal

    		•
  • Q : Explain Transfers Transfers : As

    Transfers: As employed in Schedule 10Rs and fund situation statements, transfers replicate the movement of resources from one fund to the other based on statutory authorization or particular legislative transfer appropriation authority.

    		•
  • Q : Describe GATT and its goal Describe

    Describe GATT, and its goal? GATT is the General Agreement on Tariffs & Trade. This is a treaty that seeks to decrease trade barriers among participant nations.

    		•
  • Q : Three examples of mutually exclusive

    Provide three examples of mutually exclusive projects. Mutually exclusive projects are projects which compete against each other for our selection. If firm were considering the purchase of new computer, requiring only one computer, then the pro

    		•
  • Q : Resources flow Normal 0 false false

    Normal 0 false false

  • Q : Define Legislature Legislature,

    Legislature, California: Two-house bodies of elected representatives vested with the accountability and power to make laws affecting the state (that is, except as limited by the veto power of the Governor).

    		•