**Problem-3 (discounted payback period method) Accounting**

PAYBACK PERIOD 8-12 For calculating payback period, when is the following formula valid? Chapter 8 Benefit/Cost Ratios and Other Measures 119 Annual Maintenance Costs 1,000 Annual Benefits 6,000 Overhaul Costs 7,000 every 4 years Salvage Value 2,500 Useful Life 12 years MARR 10% Solution Year Σ Costs Σ Benefits... According to payback period method, project B have shorter period and will be selected. However, it is quite possible that after seven years, project A gives return of 50% for another five years whereas project B stop giving returns after five years.

**Pay back period ..chapter solution to problems...**

MODULE 2 Capital Budgeting Example • Payback period for Project A = 3 years (cumulative cash inflows = outflows) • Payback period for Project B = 4 years + 500/3000 = 4 years and 2 months. (Note: Interpolation technique is used here to identify the exact period at which cumulative cash inflows will be equal to outflows. The amount required to equate is Rs.500, while the returns from... PAYBACK PERIOD 8-12 For calculating payback period, when is the following formula valid? Chapter 8 Benefit/Cost Ratios and Other Measures 119 Annual Maintenance Costs 1,000 Annual Benefits 6,000 Overhaul Costs 7,000 every 4 years Salvage Value 2,500 Useful Life 12 years MARR 10% Solution Year Σ Costs Σ Benefits

**Pay Back Period Examples EGEE 102 Energy Conservation**

For example, if a company invests $300,000 in a new production line, and the production line then produces positive cash flow of $100,000 per year, then the payback period is 3.0 years ($300,000 initial investment ÷ $100,000 annual payback). convert image file to pdf free online Basic payback period can be difficult to calculate where multiple negative cash flows are incurred during the investment period. This problem can be solved by calculating the modified payback period as discussed above.

**Problem-3 (discounted payback period method) Accounting**

Payback period is a capital budgeting concept which refers to period of time which is required for a project to generate a return on investment which will cover the original investment made by a company on the initial project cost. So for example if the initial project cost is $50000 and annual cash flow from such project is $10000 then it implies that payback project would be 5 years. marketing communication plan example pdf Basic payback period can be difficult to calculate where multiple negative cash flows are incurred during the investment period. This problem can be solved by calculating the modified payback period as discussed above.

## How long can it take?

### CAPITAL BUDGETING Amazon Web Services

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## Payback Period Example Problems Pdf

MODULE 2 Capital Budgeting Example • Payback period for Project A = 3 years (cumulative cash inflows = outflows) • Payback period for Project B = 4 years + 500/3000 = 4 years and 2 months. (Note: Interpolation technique is used here to identify the exact period at which cumulative cash inflows will be equal to outflows. The amount required to equate is Rs.500, while the returns from

- MODULE 2 Capital Budgeting Example • Payback period for Project A = 3 years (cumulative cash inflows = outflows) • Payback period for Project B = 4 years + 500/3000 = 4 years and 2 months. (Note: Interpolation technique is used here to identify the exact period at which cumulative cash inflows will be equal to outflows. The amount required to equate is Rs.500, while the returns from
- Basic payback period can be difficult to calculate where multiple negative cash flows are incurred during the investment period. This problem can be solved by calculating the modified payback period as discussed above.
- There are different methods adopted for capital budgeting. The traditional methods or non discount methods include: Payback period and Accounting rate of return method. The discounted cash flow method includes the NPV method, profitability index method …
- Analysts prefer the shorter payback period because it means they recover cost expenditures sooner, and these funds are ready for use again, sooner. Analysts consider a shorter payback period less risky than a more extended payback period.