Payback Period Notes: Definitions & Explanations PDF | Download eBooks
Study Payback Period lecture notes PDF with project management definitions and explanation to study “What is Payback Period?”. Study payback period explanation with project management terms to review project management course for online MBA programs.
Payback Period Definition:
Payback period is the exact length of time needed for a firm to recover its initial investment as calculated from cash inflows.
Project Management: A Systems Approach to Planning, Scheduling, and Controlling by Harold Kerzner?
Payback Period Notes:
A project must be selected based on a pre-defined selection criteria. A way of selecting a project is to compare costs and benefits associated with the project and make a trade-off between them. Benefits can be financial or non-financial. A method to analyze the financial benefits associated with the projects is called capital budgeting. Many different capital budgeting methods can be used based on the situations. One of them is payback period. As the name indicates, payback period is the amount of time that a project takes to recoup the initial investment. Payback period does not provide a precise result as the value of money decreases with time (time value of money). Payback period can be calculated using two methods; averaging method and subtraction method.
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