Payback period can be calculated using

(a) Simple Payback: as shown earlier.

(b) Discounted payback: using the discount cash flow method.

The below example illustrate the difference, Example:

Required return on investment=12.5%

Initial investment= $30,000

Expected return per year= $10,000

Use simple Payback and discounted Payback methods to determine the payback period.

PLEASE STEP AND STEP AND WE CANT USE EXCEL

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