Payback period

This topic has 1 reply, 2 voices, and was last updated 10 years ago by John Moffat.

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December 8, 2015 at 11:26 pm #289380
drice99
Member
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Hi John
I just finished watching your f9 revision past exam lectures, brilliant stuff as always
The payback period cash inflows, if it were ever asked, the average profit element, is it profit before depreciation being the ‘Operating flows’ only (minus depreciation) or would i adjust for tax aswell?
I ask even though I have not seen a specific question to calculate Payback on one of our usual investment appraisal questions but just trying to cover all bases!
Cheers
Hugh
December 9, 2015 at 8:38 am #289463
John Moffat
Keymaster
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You would use exactly the same cash flows that you use in NPV calculations.
(i.e. no depreciation because not a cash flow, but after tax because tax is a cash flow).
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