Payback Period

Payback period method is a traditional method/ approach of capital budgeting. It is the simple and widely used quantitative method of Investment evaluation. Payback period is typically used to evaluate projects or investments before undergoing them, by evaluating the associated risk. Payback period is also termed as ‘pay off back period’ method.  It helps to determine the length of time required to recover the initial cash outlay in the project. Simply, it is method used to calculate the time required to earn back the cost incurred in the investments through the annual cash inflows of the project

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