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

Participants in hedge funds-management company, The Manager or Management C...

The Manager or Management Company The firm sponsoring the Fund could often structure it as a management company. Its primary responsibility is to determine investment strategie

State the different accounting policies, State the different accounting pol...

State the different accounting policies Different accounting policies which can be adopted will have an influence on the ratios calculated and hence make comparisons more diffi

What do you mean by wealth maximization, Q. What do you mean by Wealth Maxi...

Q. What do you mean by Wealth Maximization? This is also known as value maximization or net present worth maximization approach, it takes into consideration the time value of m

What is estate tax, Q. What is Estate Tax? Estate Tax - Tax on the valu...

Q. What is Estate Tax? Estate Tax - Tax on the value of a DECENDENT'S taxable estate, usually defined as the decedent's ASSETS less LIABILITIES and certain expenses that may in

Leverages, Evaluate the importance of leverages in financial management of ...

Evaluate the importance of leverages in financial management of small scale companies

Benefits of going private company, Benefits of Going private company A...

Benefits of Going private company A public company has its shares purchased by a small group of people and ceases to be listed on stock exchange. This has many benefits includ

Financial evaluation and decision making, Financial Evaluation and Decision...

Financial Evaluation and Decision Making: The final major element of financial management is the evaluation of the information provided through the accounting and budget proces

Calculate the compound return, a)  What two legal documents should the coup...

a)  What two legal documents should the couple ensure are up-to-date if they want a sound estate plan?  What would happen if either became incapacitated or died and didn't have any

Orperating cycle, #discuss the applicability of an operating cycle in veget...

#discuss the applicability of an operating cycle in vegetable growing business in uganda..

How do flotation costs affect cost of raising that capital, When a company ...

When a company issues new securities, how do flotation costs affect the cost of raising that capital? When a company issues fresh securities flotation costs, enhance the cost o

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