Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 10Q: What is the equation to calculate the payback period?
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Question
What are the shortcomings of the payback period?
Expert Solution
Step 1
Payback period:
The payback period assesses the time period required to recover the initial investment of a project. Simply, it is the technique utilized to compute the time required to get back the cost sustained in the projects through the consecutive cash inflows.
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