Write in your own words Define the payback, net present value, internal rate of return, and...

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Finance

Write in your own words Define the payback, net present value,internal rate of return, and profitability index methods.
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Payback Payback period in the capital budgeting area means the time required to recover the funds which are expended in an investment or to reach the breakeven point For our example An 1000 investment made at the beginning of year 1 which will return 500 at the end of year 1 and year 2 respectively will have the twoyear payback period Payback period is generally expressed in years It is accumulate by year till the Cumulative Cash Flow is a positive number that year is the payback year A simplified cash flow model which shows the payback period as the time from the project completion to breakeven The payback period should be See Answer

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