Page 33 - FM Integrated WorkBook STUDENT 2018-19
P. 33

Basic investment appraisal techniques




               3.2  Advantages and disadvantages of payback









               Simple to calculate and evaluate.              Ignores returns after the payback period

               Useful in changing conditions                  Ignores timings of the cash flows


               Aids growth, minimises risk and                No definitive investment signal
               maximises liquidity

               Uses cash flows rather than profits            Ignores project profitability

























































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