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:

At-Risk Drinking

Alcohol consumption patterns that increase the likelihood of developing health problems or compound existing ones.

Alcoholic Drinks

Beverages containing ethanol, a type of alcohol produced by fermenting grains, fruits, or other sources of sugar.

Tolerance

The body's reduced response to a drug after prolonged use, requiring an increased dosage to achieve the original effect.

Illicit Substance

A substance whose production, sale, or use is prohibited by law.