Discounted cash flow is an project investment valuation method whereby future cash flows are discounted by a rate that accounts for the time value of money. It is used to make decisions between various available projects, or to determine the economic feasibility of a project. For example, when a business is expecting revenue of $250,000 next year, the current … [Read more...]
How to Use the Payback Period
Payback period is the length of time required for an investment to recover its capital. It is the amount of time required until the investment is in a break even position. It is generally used for investments that involve a large up front capital outlay, such as the construction of an industrial facility, or development of a software product. The shorter the … [Read more...]