Week 4 DQ Response
Question Description
Respond to peer in 175 words or more
In the Payback Period the payback period calculates how long it will take to pay back the money invested.
The discounted payback period gives the number of years it takes to break even from undertaking the initial expenditure, by discounting future cash flows and recognizing the time value of money
The net present value the values of future cash flows over the entire life of an investment discounted.
The internal rate of return is a discount rate that makes the net present value (NPV) of all cash flows equal to zero in a discounted cash flow analysis
The modified internal rate of return (MIRR) assumes that positive cash flows are reinvested at the firm’s cost of capital and that the initial outlays are financed at the firm’s financing cost.
Profitability index addresses the relationship between the costs and benefits of a proposed project.
I would have to say the payback period and the discounted payback period for large projects because and the payback period for smaller projects. Small businesses often want to see investments with short payback turnaround periods, because they don’t always have the cash flow or capital means to maintain business operations while waiting for an investment to pay for itself, whereas larger projects can withstand to hold out longer and have the means to do so.
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