simple payback Flashcards
1
Q
simple payback
A
the time it takes for a project to repay its initial investment
2
Q
what is it used for
A
to analyse whether an investment project is worthwhile
3
Q
calculation
A
amount required/net cash flow in a year
4
Q
advantages
A
simple to use
adapts to technological change easily
works well for companies with poor cash flow
quick process so good for dynamic markets
5
Q
disadvantages
A
can be inaccurate, just predictions
ignores qualitative aspects of project
can encourage short term thinking
doesn’t consider time value of money
