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Special Report on

Discounted payback period rule

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The discounted value of an investment's cash inflows minus the discounted value of its cash outflows. To be adequately profitable, an investment should have a net present value greater than zero. For investment in securities, the initial cost is usually the only outflow. A measure of discounted cash inflow to present cash outflow to determine whether a prospective investment will be profitable. For example, if a dentist wishes to purchase a new dental practice, he may calculate the net present value over a number of years to see if he will recover his investment in a reasonable period of time. If the ask price for the ...
such as new machinery, replacement machinery, new plants, new products, and research development projects are worth pursuing. It is budget for major capital , or investment, expenditures. Many formal methods are used in capital budgeting, including the techniques such as These methods use the incremental cash flows from each potential investment, or project Techniques based on accounting earnings and accounting rules are sometimes used - though economists consider this to be improper - such as the accounting rate of return, and " return on investment ." Simplified and hybrid methods are used as well, such as payback period
some alternative investment rules
Before examining competitors of the NPV approach, we should ask: Why consider usingNPV in the first place? Answering this question will put the rest of this chapter in a properperspective. There are actually a number of arguments justifying the use of NPV, and youmay have already seen the detailed one of Chapter 3. We now present one of the simplestjustifications through an example. EXAMPLE The Alpha Corporation is considering investing in a riskless project costing $100.The project pays $107 at date 1 and has no other cash flows. The managers of thefirm might contemplate one of two strategies: 1. Use $100 of corporate cash to ... market research, surveys and trends
Stock Market Dictionary - D
The level within many commodity, futures, and options markets are allowed to rise or fall in a day. Exchanges usually impose a daily price limit on each contract. Daisy chain Manipulation of the market by traders to create the illusion of active volume to attract investors. Date of issue Used in the context of bonds to refer to the date on which a bond is issued and when interest beings to accrue to the bondholder. Used in the context of stocks to refer to the date trading begins on a new stock issued to the public. Date of payment Date dividend checks are mailed. Date of record Date on which holders of record in a firm's ... market research, surveys and trends


Discounted payback period rule - Financial Definition
a generalization formula invented by Abrams that is the present value of regular but noncontiguous cash flows that have constant growth to perpetuity. IRS rule s used to allocate income on export sales to a foreign sales corporation. The annual rate of return that when compounded t times, would have given the same t- period holding return as actually occurred from period 1 to period t. The ratio of accounts receivables to sales, or the total amount of credit extended per dollar of daily sales (average AR/sales * 365). Accept the project if IRR is greater than the discount rate; reject the project is lower than the discount rate. industry trends, business articles and survey research
FI 3300 Final Exam S - 1
If the bank pays interest at 8 percent compounded annually, .... positive then the discounted payback period rule will always accept the project. ... To date the company has spent $22 million in R&D to develop the new software product. ... industry trends, business articles and survey research
The politics of HOPE: Middle-class voters love the scholarship, but can we ...
I still think the sensible thing to do is to restore income caps, which were in place when Zell Miller inaugurated the popular college scholarship program. But only one candidates — Democrat David Poythress — was willing to concede that possibility. As we’ve discussed, HOPE has had the greatest impact on where Georgia teens go to college rather than whether they go. If the scholarship is short on cash, I say stop giving it to families who can well afford to pay the tuition at UGA or GSU. The only other option is to cut back on how much scholarship money goes to students, but I think that diminishes the program. ... market trends, news research and surveys resources
From rehabilitation to reconciliation
'Good' people have been greatly exercised about the monumental task of resocialising Tivoli Gardens and other communities to be liberated from don rule and don dependency. I have a few things to say about that. In the first place, it is not the business of the security forces to resocialise people anywhere and to arrange or deliver welfare services. We have heard high-ranking officers publicly agonising over the need for resocialisation. Law enforcement and the maintenance of law and order is the only business of the police. Minding one's business is very important for success. The people in these special ... market trends, news research and surveys resources


Alternative Investment Rules Data for Examples
discounted payback period rule analysis: Advantages. Disadvantages. - simple rule (easy to use). - arbitrary payback threshold. - useful for firms ... technology research, surveys study and trend statistics
ASHRAE NOPR TSD Chapter 5 – Life-Cycle Cost and Payback Period ...
Table 5.8.3 Summary of Payback Period Results by Efficiency Level for Small .... discounted to the time of purchase and summed over the lifetime of the equipment . .... Under current legislation, this is 2014, 4 years after a rule could ... technology research, surveys study and trend statistics
Capital Investment Decision Rules: • Payback Period • Net Present ...
Payback Period: How many years to recuperate initial investment? Decision rule: If (payback) < x years ? ☞ invest. Weakness: 1) ignores time value of money ...
The advantages and disadvantages of NPV, IRR and the Payback rule ...
NPV is essential for financial appraisal of long-term projects, It measures the excess or shortfall of cash flows, In the NPV model it is assumed to be reinvested at the discount rate used. This is appropriate in the absence of capital rationing. Disadvantages Yes it does have some disadvantages like adjustment for risk by adding a premium to the discount rate thus making cost higher, 2nd is compounding of Risk Premium, Now we all know that Risk premium is composite of Risk free rate, Such compounding results very low NPV. IRR It calculates Break-even, IRR calculates an alternative cost of capital including an appropriate risk ...
Justifying A New Location | LinkedIn Answers | LinkedIn
First of all, the company I work for is an environmental contractor (specialized construction). Please visit our website to get a better idea of what we do ( Our company has been experimenting with a second location in a different state. We have hired a seasoned and versatile individual in the area and business has been productive to this point. I would like to produce a report justifying the cost of another office. I would like to compare the cost of mobilizing people and equipment back and forth to leasing a building, increasing our inventory, hiring staff, etc. for the new location. The individual ...