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payback method is more preferred bcz it consider all the cash flows present as well as consider time – value of money.
on other hand payback not consider all cash flows but IRR is better to use with NPVI disagree with you on payback considering all cash flows as a whole for projects. This advantange is for NPV that is why it is more prefered.
Ideally payback actually is not appropriate to use it soley becuase it wont give you sufficient information needed to decide whether project can be persued or not.What is your say on this?
NPV considers Timevalue of money + Gives absolute answer + it uses cost of capital as a data input
Payback’s eyes are closed after the payback period i.e it doesn’t consider cashflows after the payback period it might b negative after that..! Should just b used as a screening tool.. it doesn’t consider Time Value of money however discounted payback does considers the same
ROCE doesn’t considers time value of money also doesn’t give absolute answer + uses cost of capital or target rate as a decision output rather than data input.
IRR has multiple IRR issues may give multiple IRRs if cashflows are changing their signs from -ve to +ve then +ve to -ve or vice versa 🙂
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