Page 16 - FINAL CFA I SLIDES JUNE 2019 DAY 10

Session Unit 10:
35. Capital Budgeting

Payback Period, p.25

The payback period (PBP) is the number of years it takes to recover the initial cost of an investment.

Example: Payback period: Calculate the payback periods for the two projects that have the cash
flows presented in Table 1. Note the Year 0 cash flow represents the initial cost of each project.

tanties