Purchase Solution

Payback period method

Not what you're looking for?

Ask Custom Question

Assume a capital project requires $42,000 as an initial investment and expects a net cash inflow of $12,000 per year. The payback period method _________.

would consider the capital project accepable if the company requires a minimum payback of three years, is usually used as a screening device to eliminate capital projects from further investigation, uses accounting net income rather than cash flows in the calculations, or compares the rate of return to the company's cost of capital

Purchase this Solution
Solution Summary

The expert examines payback periods methods for an initial investment.

Solution Preview

Is it an objective type question. If yes then the answer is
"is usually used as a screening ...

Purchase this Solution
Free BrainMass Quizzes
Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.

Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

Business Processes

This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.

Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.

Paradigms and Frameworks of Management Research

This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.

View More Free Quizzes
Related BrainMass Solutions

  • Payback Period Methid and Discounted Payback Method

    12989 Payback Period Methid and Discounted Payback Method What are the differences between the payback period method and the discounted payback method? Which method is better in valuating investments?

  • Disadvantages of Cash Payback Method

    Cash payback method, while easy to understand and compute, suffers from a number of disadvantages: 1) Cash payback method requires an arbitrary value for the cutoff payback period: The payback period in itself does not provide any guidance as to the

  • This posting addresses the Payback Period Ratio

    Under the payback period method, it does not indicate risk at all.

  • Basic Capital Budgeting

    --The regular payback ignores cash flows beyond the payback period, but the discounted payback method overcomes this problem.

  • Dino Corporation

    method, screen out any investment project that fails to meet the company's payback period requirement.

  • Payback method

    Under the payback method we select all alternatives which have a payback period less than the cut off payback period. In case the cut off period is now known, we select the project with a shorter payback.

  • Payback and Net Present Value Methods for Dino Corporation

    Required: Using the payback method, screen out any investment project that fails to meet the company's payback period requirement. Payback period is defined as the expected number of years required to recover the original investment.

  • Payback Period

    B should be selected as it has a lower Payback period The solution evaluates the cash flows under 2 alternatives using payback method.

  • Capital Budgeting

    Flaw #2 - Payments After the Payback Period. The payback method ignores all cash flows occurring after the payback period. Because of the short-term orientation of the payback method, some valuable long-term projects are likely to be discarded.

  • Discuss Payback period

    payback method.)

View More Related Solutions