Pbp reciprocal, Finance Basics

PBP Reciprocal

PBP expresses the profitability of a project in terms of years.  It does not indicate any return as measure of investment. The PBP reciprocal has been utilized to rectify the condition; however it is only of value whereas the pattern of cash flow is relatively consistent and whereas the life of the asset is at least twice the payback period of the asset.  The payback duration is expressed as:

Investment / Annual cash flows

This PBP reciprocal is often used as a guide to ascertain the discount factor in discounted cash flow calculations i.e. to approximate IRR.

Payback period reciprocal     = 1/ PBP * 100

Posted Date: 1/31/2013 1:24:58 AM | Location : United States







Related Discussions:- Pbp reciprocal, Assignment Help, Ask Question on Pbp reciprocal, Get Answer, Expert's Help, Pbp reciprocal Discussions

Write discussion on Pbp reciprocal
Your posts are moderated
Related Questions
Example of Valuation of Bonds and Debentures K is contemplating purchasing a 3 year bond worth 40,000/= carrying a nominal coupon rate of interest of 10 percent.  K necessary

Internal finance can avoid the agency costs of debt and equity finance. In practice it is the most important source of funding.   (a)  Discuss potential problems of internal finan

The scope of supply chain management  Supply chain management includes the determination of suppliers; distributors, distribution channels and warehousing; manufacturing infor

Example of Dividend Basis Valuation Company Laxmi Synthetics pays a dividend of 10% on its Sh.60 par value ordinary shares.  This company uses a discount rate of 15%.  A

What factors would affect company consider in choosing option for capital-raising

Suppose the current yield curve is as follows: (a) Calculate the current market prices of two bonds with the following annual cash flows: Bond A: A coupon of $60 is due

Advantages of Bonus Matter a) Tax advantages         Shareholders can sell new shares, and create cash in form of capital gains such is tax exempt unlike cash dividends wh

what is cash budgeting and what is it used for

CBK - Monetary Policy The money supply in the economy has a main effect on both the rate of inflation and the level of economic activity. The level of money supply is controll

The Bim-Bom Company is expected to pay a dividend of $3.10 per share at the end of the year, and that dividend is expected to grow at a constant rate of 4.00% per annum.  The compa