![Bundle: Fundamentals of Financial Management, Loose-leaf Version, 14th + LMS Integrated for MindTap Management, 2 terms (12 months) Printed Access Card](https://www.bartleby.com/isbn_cover_images/9781305777217/9781305777217_largeCoverImage.gif)
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
![Check Mark](/static/check-mark.png)
Trending nowThis is a popular solution!
![Blurred answer](/static/blurred-answer.jpg)
Chapter 11 Solutions
Bundle: Fundamentals of Financial Management, Loose-leaf Version, 14th + LMS Integrated for MindTap Management, 2 terms (12 months) Printed Access Card
- What are the two main drawbacks of the payback method?arrow_forwardExplain the payback period model and its two significant weaknesses. How does the discounted payback period model addresses one of the problems?arrow_forwardWhat are one advantage and one disadvantage of the payback method?arrow_forward
- What is the discounted-payback method?arrow_forwardN4 Explain in very details the Discounting rate approaches: 1) Top-down Approach 2) Bottom-up approach Kindly, show the formulas, any mathematical process and any illustration that enhance the understanding the approachesarrow_forwardDid you use the same discount rate in the FCF vs DDM model? If so, why? If not, why not?arrow_forward
- Please help me solve (especially payback / discount payback)arrow_forwardstate the limitations of the payback period with illustration?arrow_forwardWhen performing benefit-cost analysis, economists usually discount future benefits and costs. Why? What are some reasons/justifications to apply relatively high discount rates? What counter-arguments are there to apply relatively low discount rates?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
![Text book image](https://www.bartleby.com/isbn_cover_images/9781305627734/9781305627734_smallCoverImage.gif)