Homework Answers
ANSWER : PAYBACK PERIOD
EXPLANATION : ALL OTHER METHODS USE DISCOUNT RATE, WHERE AS PAYBACK PERIOD DOES NOT USE ANY DISCOUNT RATE.
PAYBACK PERIOD TELLS US TIME PERIOD REQUIRED TO RECOVER INVESTMENT. SO IT REQUIRES INITIAL INVESTMENT AND CASH FLOWS. IT DOES NOT REQUIRE DISCOUNT RATE
EXAMPLE : INITIAL INVESTMENT = 100000, ANNUAL CASH FLOW =20000
PAYBACK PERIOD = 100000/20000 = 5 YEARS (THUMBS UP PLEASE)
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