While the former are students mastering concepts like shapes and letters, iPads and algebra, and the payback method
, respectively, working professionals are already adept at learning from their environment, network, and stakeholders, to name a few, and are automatically applying this knowledge to their career or personal lives.
The simple payback is mathematically defined by relating the capital invested to the annual returns as; the basic premise of the simple payback method
is that the more quickly the cost of an investment can be recovered, the more desirable is the investment.
The payback method
of investment appraisal: A review and synthesis.
Early chapters cover financial decision making concepts, while later chapters are devoted to four methods: the payback method
, the net present value method, the internal rate of return, and the profitability index method.
In the age of high computing power and easy-to-use spreadsheet software programs, a life cycle cost analysis accounting for these factors is recommended in lieu of a Simple Payback method
The seminars will also examine allocating company resources according to a prioritised list of projects as well as identifying project evaluation and analysis techniques including the discounted payback method
, internal rate of return, net present value and profitability index.
Most engineers are familiar with simple payback method
(projected savings divided by expenditure), but this is a crude measure--it underestimates the energy savings over the lifetime of the project, does not often sell the overall benefits effectively.
The DCF-based approaches are contrasted with the payback method
and the accounting rate of return as methodologically deficient albeit still widely used decision rules.
(8) It has precisely the strengths and shortcomings of the payback method
albeit embellished as a percent per year rate of return concept.
It is no wonder that some managers are moving away from so-called sophisticated appraisal techniques and returning to the safe haven of the payback method
-- which is at least simple to understand and to calculate.
However, many firms still used the payback method
as a backup or secondary approach.