Advantages And Disadvantages Of Payback

|2.3 Explain the purpose of identifying timescales, priorities and financial resources needed |Question 4 Page 4 |

1. Two commonly used methods of financial analysis are payback and present value. Payback determines the length of time for an investment to return its original cost (1). Using the assumptions stated below the payback of the Jiminy Nick wind turbine with a cost of about $3.3 million would return the investment in about four years time. Net present value summarizes the initial cost of an investment, the estimated annual cash flows, and expected salvage value, taking into account the time value of money (1). A NPV calculation for the scenario SED is reviewing equals $7,697,286 minus the investment costs of $3,318,000 totaling $4,379,286.

Thus, by year three the company will be making a profit off the investment as year three is 86.73 million profit by 55.35 cost giving the company a 31.38 million dollar surplus. Generally, a period of payback of three year or less is acceptable (Reference Entry) causing this project to be viable based off the payback analysis. Although, these calculations are flawed. The reason for this is because the time value of money is not taken into effect when calculating payback periods which is where IRR can further assist in a more realistic financial picture (Reference Entry).

The payback period looks at a project only until the costs have been recovered. This analysis tool is often ignored because it does not take into consideration the time value of money. The time value of money limitation of the payback period can be modified by using the discounted cash flows of a project for the analysis of when the outflows will be recovered.

An example of this may be that a new programme area is not financially viable must be given an opportunity to grow with any surplus costs being covered by another programme that is financially more successful.

One of the reasons I believe that Macbeth is a tragic hero is because he is of noble stature. This is true because he is a military general and the Thane of Glamis. If you are a military general you are a high rank and usually highly respected and have a large amount of responsibility. He is also a thane, which is someone who owns a large amount of land that is usually granted by the king. Thanes are also usually leaders of clans who are in control over a large amount of people.

Unlike the previous two cash flows where we considered them based on the direct impact they bring, the super project’s share of the building and agglomerator capacity must not be considered in our cash flow for the following reasons:

As a fan of numerous games is dependably a touch of sadness when you see enormous hotshot players making a great amount of money consistently while the normal fan can hardly bear to see more than several entertaining experience each year. Numerous individuals get to be irritated because of this and regularly rebuke players in light of the fact that they make a lot of money yet still watching and memorized, despite everything we stay there, either before a TV or live at the game, and appreciate viewing the experts take an interest in the games that they are best at. Individuals altogether love sports and in spite of the fact that competitors have a percentage of the best pay rates on the planet their pay is something that is legitimate in view

Project finance is a kind of Financing that has a priority does not depend on the creditworthiness of the sponsors proposing the business idea to launch the project. Approval does not even depend on the value of assets sponsors are willing to make available as collateral. Instead, it is basically a function of the project’s ability to repay the debt contracted and remunerate capital invested at a rate consistent with the degree of

company to hold their money for a longer period (5 years) while in G project the periods

4.How would you change the approach if you carried out the activity again ? How?

The PAYBACK technique is based on cash flows and it measures the time which is required for a proposal’s initial cash outflow to equal its cash inflow generated by the investment, the solution is expressed in years and month or days.

A good mystery story needs a hero, a villan and an out of the ordinary storyline. In my opinion the story should have a realistic drama and the right setting, something to drastic will not allow the reader to relate to the story. A narrator may make the story more personal and the reader can really get inside the story to know what the character is feeling and fears, increasing tension. There also should be a range of suspects; some of these characters can be used as red herrings, which can mislead the reader, adding to the shock at the end of the story. In ‘The speckled band’ the suspects are the gypsies, the exotic animals and Dr Roylott, there are some obvious and some not,

Proper following and acknowledgement of the timeline is vital to the success of this project. If the project goes overtime, it can cause serious budget mess-ups and furthermore delays.

The use of an accounting rate of return also underscores a project 's true future profitability because returns are calculated from accounting statements that list items at book or historical values and are, thus, backward-looking. According to the ARR, cash flows are positive due to the way the return has been tabulated with regard to returns on funds employed. The Payback Period technique also reflects that the project is positive and that initial expenses will be retrieved in approximately 7 years. However, the Payback method treats all cash flows as if they are received in the same period, i.e. cash flows in period 2 are treated the same as cash flows received in period 8. Clearly, it ignores the time value of money and is not the best method employed. Conversely, the IRR and NPV methods reflect that The Super Project is unattractive. IRR calculated is less then the 10% cost of capital (tax tabulated was 48%). NPV calculations were also negative. We accept the NPV method as the optimal capital budgeting technique and use its outcome to provide the overall evidence for our final decision on The Super Project. In this case IRR provided the same rejection result; therefore, it too proved its usefulness. Despite that, IRR is not the most favorable method because it can provide false results in the case where multiple negative