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- Payback period in capital budgeting refers to the time required to recoup the funds expended in an investment, or to reach the break-even point. [ 1 ] For example, a $1000 investment made at the start of year 1 which returned $500 at the end of year 1 and year 2 respectively would have a two-year payback period.
en.wikipedia.org/wiki/Payback_period
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What is a payback period in capital budgeting?
The payback period is the time required to recover the initial cost of an investment. It is the number of years it would take to get back the initial investment made for a project.
Jul 30, 2024 · The payback period is the amount of time it takes to recover the cost of an investment. Simply put, it is the length of time an investment reaches a breakeven point. People and corporations...
- Julia Kagan
- 2 min
Apr 9, 2024 · Under payback method, an investment project is accepted or rejected on the basis of payback period. Payback period means the period of time that a project requires to recover the money invested in it.
What is the payback period? As seen from the graph below, the initial investment is fully offset by positive cash flows somewhere between periods 2 and 3. Payback Period Formula. To find exactly when payback occurs, the following formula can be used: Applying the formula to the example, we take the initial investment at its absolute value.
Sep 10, 2024 · The payback period refers to how long it will take to recoup the cost of an investment. Learn how to calculate payback period, and when and why to use it.
- Laurel Tincher
Feb 5, 2024 · The payback period is a fundamental capital budgeting tool in corporate finance, and perhaps the simplest method for evaluating the feasibility of undertaking a potential investment or project.
Payback period in capital budgeting refers to the time required to recoup the funds expended in an investment, or to reach the break-even point. [1] For example, a $1000 investment made at the start of year 1 which returned $500 at the end of year 1 and year 2