The Payback Method

This video explains how to use the payback rule to make decisions about whether to accept projects in corporate finance. The video uses a comprehensive example to demonstrate how to calculate the payback period and compare it to the required time frame. The video also points out some of the weaknesses of the payback method and notes that the chief advantage of the payback rule is its simplicity.
Here's how to calculate the payback period if the payback period is not an integer:
• How to Calculate the P...
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[@mbrabonza]

Thank you Dr. McLaughlin, so much for helping me through the remainder of this MBA degree and most importantly for your inspiring story!

[@johncameron3871]

Just stumbled on your videos prior to a midterm in theory of finance and i am so happy i found this. Great videos

[@banks7583]

Your tutorials has helped me with my finance &accounting degrees..Thank you so much for your knowledge

[@vivilin4571]

Thank you so much teacher! It made my CF course much easier. Am such a big fan.

[@Edspira]

+Vivi Lin I'm glad your class went well! Thank you for the kind words, it's nice to know the videos are helpful!!

[@iam-drake]

this simplified it for me..can you talk on pv anniuty and perpetuity as well. easy formulas and calculation.

[@jeremygailmanaois1202]

Thank you so much Sir. You make these concepts and formulas easy.

[@rubenferreira-mj1ee]

Why don’t we consider the present value in the cash inflows?

[@dollynanaa]

Thank you very much; really valuable tutorials and easy to understand; that is the main thing.

[@ashwamedhyedave235]

Excellent job 👌👌👌

[@Edspira]

Thank you!

[@u01sq7]

very good . But i would suggest another video associate with payback method, which gives payback period to be inbetween integer such as 2.5 or 2.6 year...

[@Edspira]

+Wang Bo (CNMLGB) Thanks for the suggestion! I made the video you requested. Here's the link: kzbin.info/www/bejne/n3isnoKsZ9ekfq8

[@u01sq7]

Education Unlocked very effective, good work!

[@geetarudresh8461]

I 3rd of

[@fiona.e1026]

What should I do if there is intrest rate ...

[@TheLILCJ15]

I have one questions: we assume that we will get additional 75k sales from buying new balloon, and by this method we calculated that on year 4 we will break even, but there also additional costs of exploitation the new balloon, which I assume will be deducted from the 75 sales right? which means, if with new balloon i have 5k additional cost, which means I am only getting 70k each year. Is it correct?

[@a7med528]

Thanx sir

[@Edspira]

+a7med528 No problem!

[@remixowlz]

Very good explanation sir! Fantastic! I understood everything! lol you mae my lecturer look foolish XD

[@DibagusAryoseto]

i want to ask you about something sir.. if the case is i am going to invest, and then what would the best method to know whether i should accept the projects or not. is it NPV? or IRR? or payback? and why?

[@Edspira]

NPV is the best. IRR is good but it doesn't work in certain situations. Payback Method is the worst because it doesn't take into consideration the time value of money.

[@DibagusAryoseto]

what kind of situation would IRR be consider won't work?

[@Edspira]

+Dibagus Aryoseto I've made videos about three different situations in which IRR won't work. Here are the links: kzbin.info/www/bejne/laGsnoJ6mN2rY8k kzbin.info/www/bejne/eKDLgH-imciirs0 kzbin.info/www/bejne/j2XVdaGffZiBoZI

[@DibagusAryoseto]

Woah great! thank you so much Education Unlocked ! now i really get it why would NPV is the best method.. i kept on thinking about that, and now i understand. so the main point is IRR only can be used IF the negatif cash flows occur before the positive cash flows. This is really helpful! thank you so much!

[@Edspira]

+Dibagus Aryoseto Wonderful! I hope you do excellent in your courses!

[@Zuli55]

Amazing stuff, thank you! Where do you get the "r" from, in real life ?

[@aarondoucette9314]

What if the payback period is equal to the required frame? does this mean accept or reject? @Edspira

[@Strawberry-kl2ou]

Aaron Doucette accept

[@ken8844]

That horrible

[@ronadethcasison398]

please increase the volume i barely hear anything