the length of time required for an investment to generate cash flows s an investment is acceptable if its irr the length of time required for an investment to generate cash flows sufficient to recover its initial cost is the:

Name: FIN 3080 Prof Xin Li Week 12 Notes
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FIN 3080 Professor Xin Li Week 12 Notes Chapter 9 Net Present Value and Other Investment Criteria 1. The Payback Rule a. Payback Period: The amount of time required for an investment to generate cash flows sufficient to recover its initial cost i. How long until the investment “pays for itself” ii. Generally calculated by fractional years (1/2 or ¼ years) 1. To find fraction of year, take remaining required initial cost and divide by the year’s income a. This assumes the cash flow is received uniformly 2. Discounted Payback a. The length of time required for an investment’s di