What is the difference between the regular
and discounted payback periods?
The Regular Payback period is one of the capital budgeting techniques. It refers to the time period in which one can recover out its cost of the investment. If the payback period is more than the target period, then the proposal should be rejected and if it comes out to be less than the target period then the proposal should be accepted.
Discounted Payback Period is also one of the techniques of capital budgeting techniques. Under this method, the cash flows of the project are discounted to find their present values. The total present value of the cash inflows is then compared with the total present value of cash outflows, in order to find out the period taken to recover the cost of the proposal.
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