Description
Define the payback, net present value, internal rate of return, and profitability index methods.
Explanation & Answer
Attached.
Running Head: CAPITAL INVESTMENT DECISIONS
Capital Investment Decisions
Instructor’s Name
Student’s Name
Institutional Affiliation
Date
1
CAPITAL INVESTMENT DECISIONS
Define the following:
-Payback period
Payback period gauges how viable a project is by ascertaining the inflows and
assessing the period the asset or the project will take to recover the initial cost of investment.
Therefore, a payback is the period an investment takes to generate enough cash flaws that can
offset the cost incurred in investing in the project (Elmassri et al., 2016). Payback period is
calculated in the number of years. For instance, a company may be facing problems in
identifying the most viable project from a list of so many investment projects.
However, the company can consider using the payback period to ascertain which
project is most viable. According to the payba...