Explore BrainMass

Explore BrainMass

    Payback period

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    What is the payback period method in accounting?

    © BrainMass Inc. brainmass.com December 24, 2021, 4:43 pm ad1c9bdddf

    Solution Preview

    Payback Period: The payback period is simply the time taken by the project to return the initial investment. The measure is very popular and is widely used; it is also a flawed and unreliable measure.

    The cash flows from each year are added to find out the point in time at which the cumulative cash flows equal the initial investment.

    Thus suppose the initial investment is $400 million. The cash flow in the years 1,2,3 and 4 are $15 million, $ 200 million , $ 250 million and $ 50 ...

    Solution Summary

    Payback period is discussed.