Payback Without Apology
When interest rates are uncertain the net-present-value threshold required to justify an irreversible investment is increasing in the length of a project's payback period. Thus slowpayback projects should face a higher hurdle than fast-payback projects just as investment folklore suggests. This result suggests that the widely disparaged use of payback for capital budgeting purposes can be an intuitive response to correctly perceived costs and benefits.
Year of publication: |
2006
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Authors: | Boyle, Glenn ; Guthrie, Graeme |
Institutions: | Victoria Business School, Victoria University of Wellington |
Saved in:
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