Average Payback Period, usually not abbreviated. It is a method that indicates in what time the initial investment should be repaid (at a uniform implementation of cash flows).
Calculation:
where:
- t … average payback period
- øCF … average annual return
- C0 … initial investment
Use of the average payback period in practice: In the enterprise it used by CFO in assessing the effectiveness of the investment. Nowadays, this method is used more rarely.
Comments
You cannot contribute to the discussion because it is locked