Payback


	Payback
	Advantages Length of time is easy to calculate. Reduces Opportunity Cost. Easy to Understand which is beneficial to Senior Managers with no financial experience. Highlights early cash flows, so it is easy to spot cash flow problems early.	Disadvantages It ignores cash inflows and cash outflows after the point of payback. Could potentially reject projects that are highly profitable in the future. Difficult to establish a Benchmark for the best Payback time. Each project will have different Payback times so it is difficult to dtermine which project is the best from this. e
	Evaluation

Length of time is easy to calculate. Reduces Opportunity Cost.
Easy to Understand which is beneficial to Senior Managers with no financial experience.
Highlights early cash flows, so it is easy to spot cash flow problems early.

It ignores cash inflows and cash outflows after the point of payback. Could potentially reject projects that are highly profitable in the future.
Difficult to establish a Benchmark for the best Payback time. Each project will have different Payback times so it is difficult to dtermine which project is the best from this. e

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