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10 Cards in this Set
- Front
- Back
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Advantages of Payback
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Easy to understand,
Works well with cash intensive business |
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Disadvantages of payback
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Arbitrary standard,
Does not use TVM, Does not consider cash flows past the payback day |
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Advantages of Discounted Payback
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Easy to understand,
Works well with cash intensive business |
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Disadvantages of Discounted payback
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Arbitrary standard,
Does not consider cash flows past the payback day |
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Advantages of AAR
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Easy to understand
Information is readily available |
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Disadvantages of AAR
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Does not use TVM,
Uses accounting information, Almost always overstates the true return |
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Advantages of NPV
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Uses all cash flows,
Uses TVM, Has uniform decision rule |
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Disadvantages of IRR
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Answer is in terms of % Can’t put % into bankAnswer is in terms of % Can’t put % into bank
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Advantages of IRR
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Uses TVM,
Considers all cash flows, Absolute decision process |
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Advantages and disadvantages of PI
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all same as PI
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