Payback
From MediaWiki
The payback period is the length of time it takes for the initial investment to be paid out of the cash flows. To calculate what proportion of the year that the payback became profitable take the last year's ending value that is negative and divide it by next year's net cash flow
i.e. 40/60 = 2/3 of the next year
Payback is easy to calculate Benefits projects that have an earlier Payback even though other projects have longer but greater payback Ignores time cost of money Deals with risk
