Fin 515 midterm exam – summer 2015
Other than the payback time, other metrics like net present value (NPV), can be used to assess projects. It takes into consideration both the money value and the opportunity costs of investing in one venture or another. Businesses may consider alternative options if the expected returns for an investment do not meet their needs.
Companies can gain a better understanding of the payback period factors to help them make informed investments. This will allow them to take more accurate decisions on how they plan to recover funds and maximize profits in a shorter time frame.