Class notes
Calculating Payback ARR NPV IRR and PVI
- Course
- Institution
Calculating Payback ARR NPV IRR and PVI
[Show more]
Seller
Follow
Content preview
Calculating Payback ARR NPV IRR and PVIPayback with uneven cash flows
Payback occurs at the end of a certain year
year Net cash flows Cash returned
1 24000 24000
2 22000 46000
3 24000 70000
4 30000 10000
5 30000
6 26000
7 12000
*by the end of year 4, all of the 100k cost is returned. Therefore, payback is 4 years
Payback with uneven cash flows
Payback occurs between 2 years
year Net cash flows Cash returned
1 24000 24000
2 20000 44000
3 20000 64000
4 30000 94000
5 30000
6 26000
7 12000
*payback occurs after year 4 but before the end of year 5
*we have 94k at the end of year 4 and need 6k more to reach 100k after year 4
*that 6k is 20% of the cash coming during year 5
*therefore payback occurs in 4.2 years
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller celchoi9. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $7.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
52928 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now