9.2 Payback Period
By far, the easiest decision model to administer is payback period. This model answers one basic question: How soon will I recover my initial investment? The model assumes that there is an outflow of cash at the beginning of the project and a series of cash inflows during future periods. It simply calculates at what point in time the company recovers its cash outflow or payback with corresponding future cash inflows.
Get Financial Management: Core Concepts, Third Edition now with the O’Reilly learning platform.
O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.