Payback Period Calculation – PLEASE HELP!!!!

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  • March 6, 2014 at 10:11 pm #184207
    testtaker12
    Member

    When deciding on the payback period and both the cash flows of each year and the net earnings of each year are given which do you use?

    I believe it is cash flow but not certain…

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  • March 6, 2014 at 10:16 pm #524026
    005
    Participant

    Always cash flow. Same goes for Discounted Pay Back Period

    BEC - ✔
    REG - ✔
    AUD - ✔
    FAR - 11/29/14

    CPAExcel, Ninja MCQs, and a sh*t ton of coffee

    March 6, 2014 at 10:16 pm #524069
    005
    Participant

    Always cash flow. Same goes for Discounted Pay Back Period

    BEC - ✔
    REG - ✔
    AUD - ✔
    FAR - 11/29/14

    CPAExcel, Ninja MCQs, and a sh*t ton of coffee

    March 6, 2014 at 10:17 pm #524028
    LongShot
    Participant

    You're right, you should use the total cash flows, not the net earnings. Payback period's just a very simple formula looking at total investment and total annual cash flows to determine how long it should take to get the money back from your investment.

    FAR - 75
    AUD - 72; 87
    REG - 64; 74; 84
    BEC - 88

    Done!!

    March 6, 2014 at 10:17 pm #524071
    LongShot
    Participant

    You're right, you should use the total cash flows, not the net earnings. Payback period's just a very simple formula looking at total investment and total annual cash flows to determine how long it should take to get the money back from your investment.

    FAR - 75
    AUD - 72; 87
    REG - 64; 74; 84
    BEC - 88

    Done!!

    March 6, 2014 at 10:19 pm #524030
    testtaker12
    Member

    Okay cool, thanks everyone!!!

    March 6, 2014 at 10:19 pm #524073
    testtaker12
    Member

    Okay cool, thanks everyone!!!

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