Using the payback method to evaluate capital projects is a simpler method than either net present value or internal rate of return.Answer the following questions relating to the payback method.
Required:
a.What does the payback period measure?
b.How is the payback period calculated when the annual cash flows are equal?
c.How is the payback period calculated when the annual cash flows are not equal?

Question

Quizplus · Accepted Answer

The Answer of Using the payback method to evaluate capital projects is a simpler method than either net present value or internal rate of return.Answer the following questions relating to the payback method.
Required:
a.What does the payback period measure?
b.How is the payback period calculated when the annual cash flows are equal?
c.How is the payback period calculated when the annual cash flows are not equal?

Using the Payback Method to Evaluate Capital Projects Is a Simpler