Concept explainers
To explain: The three potential flaws with regular payback method and whether the discounted payback method corrects all three flaws.
Introduction:
Payback Period:
It refers to the time period that is required to get an amount invested in a project with some return on it. In other words, it is the time that a project takes to repay the amount invested with some return attached to it.
Discounted Payback Period:
It refers to the time that a project takes to repay the amount invested with some return attached to it after considering the
Trending nowThis is a popular solution!
Chapter 11 Solutions
MindTap Finance, 2 terms (12 months) Printed Access Card for Brigham/Houston's Fundamentals of Financial Management, 14th (Finance Titles in the Brigham Family)
- What are one advantage and one disadvantage of the payback method?arrow_forwardHello, I having trouble getting the right answer for Option B "net present value," and the "internal rate of return." The question says to "experiment with alternative discount rates to arrive at a net present value of zero." What exactly am I doing wrong and what steps did I miss to get the correct answer for option B? thank you.arrow_forwardNeed help with a and b. Also how high can the discount rate be before you would reject the project?arrow_forward
- Give at least two reasons for choosing the net present value method and at least two reasons each for rejecting IRR and discounted payback period methodarrow_forwardc) explain the disadvantages of each criteria; payback period, discounted payback, NPV, IRRarrow_forwardWhat are the weaknesses of the payback method?arrow_forward
- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax CollegeEssentials of Business Analytics (MindTap Course ...StatisticsISBN:9781305627734Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. AndersonPublisher:Cengage Learning