Question: NPV(Net Present Value) with discount rate is 6% for this period and cashflow as followed. Period 0, Cashflow ($150,000) Period 1, Cashflow $70,000 Period 2,

NPV(Net Present Value) with discount rate is 6% for this period and cashflow as followed.

  1. Period 0, Cashflow ($150,000)
  2. Period 1, Cashflow $70,000
  3. Period 2, Cashflow $80,000

Net present value is 71,198.

Payback period is 2 years.

Please elaborate in detail the obvious problem with using the payback method (Profit Index, NPV, IRR & Time Value Of Money).

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