What are the methods of capital budgeting in the payback period?
A technique which is used to determine the proposed investment should be accepted are known as Capital budgeting. The financing for the purchase, sales, modification or replacement of fixed assets is involved here. The time required to earn back the investment made from net cash flows is known as the payback period. This is referred to as a straightforward capital budgeting method. The investment that will be recovered in the shortest period is considered as best. It is usually expressed in years. To determine the payback period for capital budgeting the total cash outflows( this is assumed to occur at the beginning of the project) is divided by net cash inflows generated per year by the project( this is believed to be same each year).