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Chapter 20. Building Discount Formulas > Calculating the Payback Period

Calculating the Payback Period

If you purchase a store, a piece of equipment, or an investment, your hope always is to at least recoup your initial outlay through the positive cash flows generated by the asset. The point at which you recoup the initial outlay is called the payback period. When analyzing a business case, one of the most common concerns is when the payback period occurs: A short payback period is better than a long one.


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