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Discounted Payback Period
The discounted payback period (DPB) is the amount of time that it takes (in years) for the initial cost of a project to equal to discounted value of expected cash flows, or the time it takes to break even from an investment. It is the period in which the cumulative net present value of a project equals zero. Calculation Cumulative discounted cash flows will start with a negative value due to the original cost of investment, but as cash is generated each year after the original investment the discounted cash flows for those years will be positive, and the cumulative discounted cash flows will progress in a positive direction towards zero. When the negative cumulative discounted cash flows become positive, or recover, DPB occurs. Discounted payback period is calculated by the formula: :DPB = Year before DPB occurs + Cumulative Discounted Cash flow in year before recovery รท Discounted cash flow in year after recovery Advantages Discounted payback period helps businesses rej ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Cash Flow
A cash flow is a real or virtual movement of money: *a cash flow in its narrow sense is a payment (in a currency), especially from one central bank account to another; the term 'cash flow' is mostly used to describe payments that are expected to happen in the future, are thus uncertain and therefore need to be forecast with cash flows; *a cash flow is determined by its time ''t'', nominal amount ''N'', currency ''CCY'' and account ''A''; symbolically ''CF'' = ''CF''(''t,N,CCY,A''). * it is however popular to use ''cash flow'' in a less specified sense describing (symbolic) payments into or out of a business, project, or financial product. Cash flows are narrowly interconnected with the concepts of value, ''interest rate'' and liquidity. A cash flow that shall happen on a future day ''t''N can be transformed into a cash flow of the same value in ''t''0. Cash flow analysis Cash flows are often transformed into measures that give information e.g. on a company's value and situat ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Break Even
Break-even (or break even), often abbreviated as B/E in finance, (sometimes called point of equilibrium) is the point of balance making neither a profit nor a loss. Any number below the break-even point constitutes a loss while any number above it shows a profit. The term originates in finance but the concept has been applied in other fields. In economics In economics and business, specifically cost accounting, the break-even point (BEP) is the point at which cost or expenses and revenue are equal: there is no net loss or gain, and one has "broken even". A profit or loss has not been made, although opportunity costs have been "paid" and capital has received the risk-adjusted, expected return. In other words, it is the point at which the total revenue of a business exceeds its total costs, and the business begins to create wealth instead of consuming it. It is shown graphically as the point where the total revenue and total cost curves meet. In the linear case the break-even point ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Payback Period
Payback period in capital budgeting Capital budgeting in corporate finance is the planning process used to determine whether an organization's long term capital investments such as new machinery, replacement of machinery, new plants, new products, and research development project ... refers to the time required to Recoupment, recoup the funds expended in an investment, or to reach the Break-even (economics), break-even point. Farris, Paul W.; Neil T. Bendle; Phillip E. Pfeifer; David J. Reibstein (2010). ''Marketing Metrics: The Definitive Guide to Measuring Marketing Performance.'' Upper Saddle River, New Jersey: Pearson Education, Inc. . The Marketing Accountability Standards Board (MASB) endorses the definitions, purposes, and constructs of classes of measures that appear in ''Marketing Metrics'' as part of its ongoinCommon Language: Marketing Activities and Metrics Project For example, a $1000 investment made at the start of year 1 which Profit (economics), returned $500 a ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |