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 MA43 Net Present Value, Payback Period, and IRR Sample 2022-2025

2022-2025 Form

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in this video we're going to talk about how to use the payback method when the payback period is not an integer for example let's say it's two point four years or two point seven years something like that so let's jump into an example let's say that there's a firm that has a required payback period for this type of project of three years okay so if the project hasn't recouped its initial investment within three years then we're not going to accept that project right so the initial investment for this project let's call it project a is $80,000 so we're going to forecast the cash flows for project a and if we don't get at least $80,000 within three years if we don't pay if this project doesn't pay for itself pay for that eighty thousand within three years if we can't break even then we're going to reject project K so then the question is we have to calculate a payback period of this project how quickly does this project pay itse

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