Payback Period Method

Payback Period Method. What is pay back period method. Example of the Payback Period Averaging method.

Simple payback method is a capital budgeting technique that calculates the time period within which the net cash inflows of a project will repay the initial capital cost of the project. With this method payback period is calculated by dividing the annualized cash inflows a project or product is expected to generate by the initial expenditure. The video uses a comprehensive exam.

What is pay back period method.

For example if it takes five years to recover the. Those investments with even cash flows are computed by dividing. This type of analysis allows firms to compare alternative investment opportunities and decide on a project that returns its investment in the shortest time if that criteria is important to them. Example of the Payback Period Averaging method.