Capital Budgeting
Payback Period
Definition
What is Payback Period?
The time required for cumulative cash inflows to recover the initial investmentAn asset or commitment of money made with the expectation of future income, growth, or both..
Example in practice
How This Looks in Practice
A ₦10 million project returning ₦2.5 million yearly has a four-year simple payback.
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Related Terms
Capital Budgeting
Net Present Value
Present value of expected cash inflows minus present value of expected cash outflows.
Capital BudgetingInternal Rate of Return
The discount rate that makes a project's net present value equal to zero.
Capital BudgetingModified Internal Rate of Return
A return measure that uses specified financing and reinvestment rates rather than assuming reinvestment at the IRR.
Company DisclosuresAnnual Report
A yearly publication containing financial statements, management discussion, governance information, and other disclosures.