--%>
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 : Describe free cash flows Describe "free

    Describe "free cash flows?" It represents the total cash flows from business operations which are obtainable to be distributed to the suppliers of a firm's capital each year either within the form of interest to the debt holders, or dividends to

    		•
  • Q : Describe Form 9 Form 9 : It is the

    Form 9: It is the request by department for space planning services (example, new or extra space lease extensions, or renewals in non-institutional) and also evaluated by the Department of Finance.

    		•
  • Q : Compare and contrast the potential

    Normal 0 false false

  • Q : Question based on multiplier Normal 0

    Normal 0 false false

  • Q : Define Executive Branch Executive

    Executive Branch: One of the three branches of state government, accountable for administering and implementing the state's laws and programs. The Governor's Office and those individuals, departments, and offices reporting to it (that

    		•
  • Q : Describe demand factor Normal 0 false

    Normal 0 false false

  • Q : Describe compensating balances its need

    Describe compensating balances and why do banks needs them from some customers? Under what situation would banks be most likely to impose compensating balances? Compensating balances are funds that a bank needs a customer to maintain in a non-i

    		•
  • Q : Financial crisis during 1997-1998

    Describe the Financial crisis during the time period of 1997-1998 ?

    		•
  • Q : How do mergers influence small

    How do mergers influence small businesses?According to a recent study through Federal Reserve & Wharton Financial Institutions Center economists, not a great deal. Their analysis revealed that acquisitions don't seem to be related with a sig

    		•
  • Q : Define Legislative Counsel Digest

    Legislative Counsel Digest: The summary of what a legislative measure does contrasting the existing law and the proposed change. This summary emerges on the first page of the bill.

    		•