# The Premise Of Payback Methods

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The premise of payback methods starts with how long it takes to recover the amount of money put into the project. It’s overall better for the payback period to be shorter in the long run. There is payback methods listed for four alternative projects related. For instance, in each project the initial outlay is \$8,000. Therefore, by the end of 2015 projects one and two have recovered the initial \$8,000 investment, (Finkler, S.A., Ward, D.M. & Calabrese, I.D., 2013). As a result, a payback period of 3 years is the amount of time. In 2016, is when the initial investment of projects three and four recover. Then, the other two projects are lower because of the payback period is 4 years. Issues can arise with the payback methods and if projects one …show more content…
For example, present value of \$500 cash amount currently and figuring out how to accumulate if invested interest rate (i) of 10% for a period of time (N) of 2 years. Once calculating the compounded interest is calculated, and then multiply the interest rate by initial investment period. Next, the mathematical formula developed to solve some time value of money issues of FV= PV (1 + i) n which is built into computer spread sheets and business calculators. Other issues or to solve an answer that arises, the formulas can be used are FV= PMT [1 + i) n -1/ i] and the other formula of FV=PMT [1-1/(1 + i) n/ i]. Usually, identical payments are used with five variables of FV, PV, N, I, and PMT. Overall, time value of money methods presents a framework for solving numerous issues dealing with receipt or payment of cash in diverse time periods. Not only business calculators, but Microsoft excel helps with a great deal of time value of money calculations and using the correct formulas for problem …show more content…
In the internal rate of return method, the desire to find out whether it is earning more or less than a specified hurdle rate. As opposed to NPV method which rarely indicates the rate of return a project is earning. Gathering from these conclusions results as problems arise when comparing projects when all have positive NPV’s. Another contrasting point if internal rate of return from NPV is greater than zero, the earning is more than your rate of return. On the other hand, if the NPV is less than zero the rate of return is less than desired. By earning exactly as needed for the hurdle rate, the NPV would be zero as a result. If a company wants to find out their rate of return of the project earns, or internal rate of return, it’s important to find the interest rate to which the equation is true. This is a simple approach to finding the internal rate of return as Microsoft excel would compute the formula even when cash inflows from a project change each

• ## An Analysis Of Liquidity Ratio Of Sun Pharmaceutical Limited

Mostly the liquid ratio 1:1 shows ideal position of the firm to pay off short term liabilities from the liquid assets. From the above Table – 3 it can be observed that liquid ratio shown fluctuating trend during the study period. In 2005-06 current ratio was 5.86 times which decreased continuously for a two years and reached at 1.67 times in 2007-08. Afterwards ratio shown steady position for two years with minor difference but in 2010-11 it increases with 2.40 times. In last two years of study period it shown with 0 .17 and -0.41 respectively in 2013-14 and 2014-15.…

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• ## Costco Case Study

Kroger, in 2016, has introduced a new payables policy that extends their period 2 days longer than the 5 year average. With a payables period of 24.45 days, Kroger only needs to finance with cash for 6.62 days. Should they continue to better these cycles, it is possible to see a complete remission of the cash cycle. Short-term financing Ex-4 From our examination of the previous three charts, we have made several conclusions: (1) Costco’s short term cycles and periods have slowly been getting less efficient over the past 5 years and have led to a cash cycle in 2016 that is more than double 2015’s. (2) Walmart had struggled in 2014 with its short term policies, but is now on track to being more efficient with short-term financing.…

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• ## Nt1330 Unit 1 Case Study

Based on a 35% tax bracket the after tax revenue stream of SIMP is \$509 please refer to cell J1 VS the 30-Year which is \$424 please refer to cell T12 SIMP’s the after tax revenue stream is \$72 a month higher, this gives lenders \$72 a month more revenue over 10 years to reinvest due to the fact SIMP borrowers monthly payments are composed of \$100% principal oppose to 90% interest, in the case of the 30-year model. How do we quantify how much more yield SIMP would receive due to having \$72 more dollars each month to reinvest over 10 years? Well one way would be to SIMPly add this amount to our present revenue stream. Please refer to cell J3 SIMP’s effective 10 year yield average would be 6.93%. SIMP produces .93 basis points higher yield at half the risk of a 30 year mortgage.…

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• ## Inventory Turnover Ratios

In 2014, GWA Group Limited had “three major customers which comprised 44% of the trade receivables” (GWA Group Limited, 2014, p. 74); therefore, one slow paying debtor could have contributed to the spike in settlement days. Although, there is an opportunity here for GWA to focus on reducing the collection…

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• ## Analysis Of The Article On Should Everyone Go To College

The more an individual has to compensate to attend a school, then the lower the net benefit will be of attending. The Hamilton Project calculates a four-year degree to cost approximately \$54,000. In addition, other recent studies Consumer Financial Protection Bureau has exemplified that repaying college tuition can last up to ten years or more. “After attempting to account for in-state vs. out-of-state tuition, financial aid, graduation rates, years taken to graduate, wage inflation, and selection, nearly to hundred schools on the 2012 list have negative ROIs” (Owen and Sawhill 214). With the rising cost of tuition and indefinite job market, individual’s should consider whether obtaining a bachelor’s degree is essential in today’s…

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• ## Quick Ratio Analysis: Bob Evans Balance Sheet

As a result, the gross profits did not increase, but dropped a bit compared to 2013. Furthermore, in the account of operating expense, the company has shown an increasing trend by increasing by 6.93% from 2013 to 2015. However, this played a major role in Bob Evans Farms’ regressive net income. If the executives can improve the administrative system and decrease the expense in operating by making it more efficient, we might hopefully see an increase in net income. Lastly, for additional information, Table 1 contains the financial summary of Bob Evans Farms for the last four…

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• ## Social Security Pros And Cons

In 1940, there were 159.4 workers for each beneficiary, but the ratio fell to 5.1 workers to each beneficiary by 1960, and by 2013 there were only 2.8 workers to each beneficiary. As you can see the rapid decline of workers is occurring this is occurring because, starting in 2010 the post-World War II baby boomers era will reach the retirement age of 65, and from 2010 to 2040 over 40 million workers will expect money from the program. This creates a problem because the assets in the Social Security trust funds are expected to be exhausted in 2033, according to the Social Security Board of Trustees ' annual report. After that, incoming tax revenue will provide enough income to pay out about three-quarters of promised benefits. Younger people paying the same portion of their paycheck want the same benefits when they retire as the older…

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• ## Personal Financial Goals

To meet this goal, I must contribute \$84 per month into a savings account created for this emergency fund. After setting short-term financial goals, the next step in financial planning is to set intermediate goals. These are goals that should be reachable within the next five to ten years. These goals will be significantly impacted by life-stage adjustments as financial needs will change drastically over a period of several years. Some of the needs that will change are housing, insurance, and…

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• ## Assignment 5: Business Analysis

In Mvelope 's terms, this is allotting amounts to your envelopes, and you can add or delete envelops, add limits, and copy budgets from month to month. You can further edit each envelope individually, selecting the name and category. You can choose to have a bill be monthly, periodically or an everyday expense. From this view, you can schedule out a whole year rather than just a few months. This software is very much set up to keep track of synced accounts, so manually adding transactions is not as intuitive as it is with the best home finance software, but once you figure out the process, it is not difficult.…

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• ## Big Lots Swot Analysis

However, the quick ratios of Big Lots decreased from 0.12 to 0.08, indicating Big Lots may have trouble paying back short-term debt (since inventories occupied over 85% of current assets). In addition, as reported by Big Lots 10K, Big Lots had a total of around 1,956 million of contractual obligations at 01/30/2016. Among which, about 46.5% would be due in less than a year. Thus, Big Lots may encounter difficulty paying their short-term debt in near…

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