What is the definition of payback?
The length of time before the cumulated stream of forecasted cash flows equals the intitial investment
returning money to the person you are in debt to
When do you accept a project?
When the project's payback period is > than the threshold
When the project's payback period is
What are the drawbacks of the payback method?
It makes no allowance for the time value of money
The payback period doesn't state a specific date to pay by
Receipts beyond the payback period are ignored
It is quick and easy
It is better than the NPV method
What is meant by the term discounted payback?
Future cash flows are calculated after the payback period is determined
Future cash flows are discounted prior to calculating the payback period
