If Net Cash Inflows Are Unequal,how Is the Payback Period

question 128

Essay

If net cash inflows are unequal,how is the payback period (in years)of an investment is calculated?

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Definitions:

Net Present Value

A method used in capital budgeting to assess the profitability of an investment or project, calculated by discounting all expected future cash flows to the present value.

Market Value

The present cost set for assets or services to be traded in the marketplace.

Investment Criteria

The guidelines or metrics used by investors or managers to assess the attractiveness of an investment or project.

Shareholders' Interests

The stakes or claims that individuals or entities holding shares in a company have in terms of dividends, voting rights, and share in residual assets.