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Chapter 12. Examining Decision Criteria ... > Shortening the Payback Period

Shortening the Payback Period

It's an unfortunate but immutable fact of business life that, after you have gone through these careful calculations to derive payback periods based on both undiscounted and discounted cash flows, your executive director of finance says, “Smith, your analysis is close, but we have to keep the undiscounted payback to a maximum of five years. Go do it again.”

Here's how to meet that five-year requirement.


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