Using the Payback Method to Evaluate Capital Projects Is a Simpler

question 7

Essay

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?

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Definitions:

Lower Leg

The part of the leg between the knee and the ankle, comprising the tibia and fibula bones.

Depressed Fracture

A type of bone fracture where part of the skull is sunken in due to trauma.

Inward

Directed or moving towards the inside or center.

Clavicle

A long bone that serves as a strut between the shoulder blade and the sternum or breastbone.