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Topic: bail-out payback method? (

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bunny_006
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Joined: 03 Jun 2008
Online Status: Offline
Posts: 12

Posted: 26 Jun 2008 at 12:26 \| IP Logged

How to calculate payback period using bail-out method?

(Initial cost - salvage value)/ Increase in annual cash flow ?

Is that right?

The regular payback period doesn't consider the salvage value, right?

I am really confused.

Thanks a lot!

jrupa
Major Contributor

Joined: 16 Aug 2007
Location: United States
Online Status: Offline
Posts: 444

Posted: 26 Jun 2008 at 22:23 \| IP Logged

yes u r rt bail out payback method takes the salvage value of the project while calculating the net cash inflow... but the payback period does not considers teh salvage value of the project to calculate the net cash inflow

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