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Concept explainers
a)
To discuss: The calculation of a payback period is the measure that gives the information about a series of cash flows and the decision to rule criteria of the payback period.
Introduction:
The payback period is one of the capital budgeting techniques, which refers to the number of periods that are needed to get back to the actual investment in a project.
b)
To discuss:The problems of payback period by assessing the cash flows
Introduction:
The payback period is one of the capital budgeting techniques, which refers to the number of periods that are needed to get back to the actual investment in a project.
c)
To discuss: The advantages and the situation in which, the payback period will be appropriate.
Introduction:
The payback period is one of the capital budgeting techniques, which refers to the number of periods that are needed to get back to the actual investment in a project.
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Chapter 9 Solutions
Fundamentals Of Corporate Finance, Tenth Standard Edition
- LO 1 8.3 Payback Period Concerning payback: Describe how the payback period is calculated and describe the information this measure provides about a sequence of cash flows. What is the payback criterion decision rule? a. b. What are the problems associated with using the payback period as a means of evaluating cash flows? What are the advantages of using the payback period to evaluate cash flows? Are there any circumstances under which using payback might be appropriate? Explain. с.arrow_forwardDescribe the development of discounted cash flow techniques (DCFs)?arrow_forward3. Describe the Discounted Cash Flow Method. How is this value determined, and what are the assumptions/limitations?arrow_forward
- Cashflow vs. net income: Which strategy is more appropriate?arrow_forwardWhich method does not consider the time value of money? Choose the correct. A. Net present value B. Internal Rate of Return C. Average rate of return D. Profitability Indexarrow_forwardGive some examples of Discounted cash flow?arrow_forward
- Discuss Positive side effects and negative side effects cash flows? Provide examples. Explain thestand-alone principle. Provide examples.arrow_forwardWhat are the difficulties and problems when it comes to using the free cash flow valuation model?arrow_forwardHow should I think about the discount rate in a discounted cash flow model, and what it means (in real life)? And where do I find inputs for the discount rate? How is it calculated?arrow_forward
- Intermediate Financial Management (MindTap Course...FinanceISBN:9781337395083Author:Eugene F. Brigham, Phillip R. DavesPublisher:Cengage Learning
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