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#analyst-notes #cfa-level-1 #corporate-finance #reading-35-capital-budgeting #study-session-10
Payback period is the expected number of years required to recover the original investment.
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Subject 3. Investment Decision Criteria
) 4 = 0 Since it is difficult to determine by hand, the use of a financial calculator is needed to solve for IRR. The IRR for Project A is 18.32% and for Project B is 15.03%. Payback Period <span>This is the expected number of years required to recover the original investment. Payback occurs when the cumulative net cash flow equals 0. Decision rules: The shorter the payback period, the better. A firm should establish a benchmark payb


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