Generalized Method of Determining the Payback Period for both Conventional and Non-conventional Cash Flows: Ready-to-Use Excel Formulas and UDF

The issue of assessing the effectiveness of a project of an ecologistic system using the criterion of «a discounted payback period», which takes into consideration the transformational changes in the project life cycle, was considered. The specific features of the life cycle of a project of an ecologistic system, in the structure of which it is proposed to include environmentally-oriented regeneration and revitalization phases, were explored. The phases of a life cycle were divided into stages, between which consecutive and parallel relations were established. The project life cycle consists of time intervals, during which from one to three stages of the project phases can run in parallel. A model of the life cycle of an ecologistic system, which shows the relations between time intervals and cash flows that correspond to the stages of the project life cycle phases, was developed. A mathematical formula for calculating the discounted payback period of a project, which takes into consideration the specific features of the formation of cash flows of separate phases of the life cycle of an ecologistic system, was proposed. The application of the formula is possible when assuming the constancy of cash flows of the stages of operational and the regeneration phases, which corresponds to the conditions of uncertainty of their forecasting at the beginning of the project. The functional dependences between the discounted payback period and cash flows during the phases of a project life cycle were studied. Depending on a phase of the life cycle, the dependence is expressed by a linear, polynomial, or power function. The identification of functional dependences makes it possible to study the dynamics of changes in the discounted payback period with changes in project cash flows, which can be used in forecasting the effectiveness of an ecologistic system project.

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The effect of inflation on the optimum payback cut-off

South African Journal of Business Management ◽

10.4102/sajbm.v22i1/2.895 ◽

1991 ◽

Vol 22 (1/2) ◽

pp. 22-32

Author(s):

J. U. De Villiers

Keyword(s):

Discount Rate ◽

Investment Decision ◽

Cash Flows ◽

Payback Period ◽

Investment Appraisal ◽

Systematic Relationships

Despite the theoretical criticisms against it, payback is one of the most commonly used methods of investment appraisal in practice. Its ease of calculation and simplicity are seen as its most important advantages. In addition, an unsophisticated method like payback can yield the correct investment decision as long as the correct cut-off is specified. In this paper the optimum payback cut-off and how it is influenced by inflation is studied. Three different methods of calculating payback under inflation are investigated. In all of these the optimum cut-off depends upon the type of assets (current, depreciable or non-depreciable assets) as well as the life of depreciable assets employed. The study shows that the optimum nominal payback cut-off (where the payback calculation is based on inflated cash flows) decreases with increasing inflation for all asset types. The optimum real payback cut-off (based on nominal cash flows adjusted for inflation) does not change with inflation. The optimum uninflated payback cut-off (where inflation is ignored) decreases rapidly with inflation for projects employing current assets. In the paper is shown that complex but systematic relationships exist between a project's payback period and its discount rate. Despite its deficiencies, the use of the payback method is therefore not entirely irrational.

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The Extent of Using and Trusting Capital Budgeting Methods in Projects Appraisal in Palestinian Corporations

Modern Applied Science ◽

10.5539/mas.v12n6p151 ◽

2018 ◽

Vol 12 (6) ◽

pp. 151

Author(s):

Ahmad N. H. Anabtawi

Keyword(s):

Net Present Value ◽

Capital Budgeting ◽

Cash Flows ◽

Payback Period ◽

The Other ◽

Present Value ◽

Internal Rate ◽

Public Corporations ◽

Rate Of Returns ◽

Accounting Rate

This research paper aims to find the degree of the use as well as the trust of the Net Present Value (NPV), Payback Period (PBP), Internal Rate of Returns (IRR) and Accounting Rate of Returns (ARR) as a key capital budgeting method. The research conducted on the listed corporations in Palestine which are 48 company. A questionnaire distributed on 77 financial and project/operations managers in these corporations with 67 responds. The result shows that both discounted and non-discounted cash flows methods are used and trusted by Palestine public corporations. However, on the other hand, the above four methods are volatile in term of use and trust. The most used and trusted capital budgeting method is the Payback period (PBP). This followed by the Net Present Value (NPV). Accounting Rate of Retunes (ARR) becomes third. Thus the least used and trusted method is the Internal Rate of Returns (IRR).

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ANALISIS KELAYAKAN USAHA PENGGILINGAN PADI DI DESA LAKATAN KECAMATAN GALANG KABUPATEN TOLITOLI

Jurnal Agrotech ◽

10.31970/agrotech.v9i2.38 ◽

2019 ◽

Vol 9 (2) ◽

pp. 60-65

Author(s):

Nur Hikmah ◽

Juria

Keyword(s):

Interest Rate ◽

Cash Flows ◽

Payback Period ◽

Net Benefit ◽

A Value ◽

Efficient Level ◽

Future Cash Flows

This study aims to determine the level of Feasibility of "Cahaya Ummul " Milling. Determination of the object and location of the study was intentionally determined. The results showed that the analysis of the payback period or the length of time the investment will be returned occurred in 9 years 3 months, NPV analysis or estimated future cash flows discounted at 14% with a total NPV of 232,480,306 > 0 (positive), Net B / C analysis is the value of the ratio between the number of positive net benefit PVs with the number of negative net benefit PVs obtained a value of 1.19> 1, and the IRR analysis of the efficient level of an investment of 21,016% with an interest rate of 14% when evaluating. So this business was declared worth the effort.

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Methodology for calculating the criteria of economic efficiency of investments in nuclear icebreakers

Nuclear Energy and Technology ◽

10.3897/nucet.7.78501 ◽

2021 ◽

Vol 7 (4) ◽

pp. 333-339

Author(s):

Artem V. Klauz ◽

Igor E. Frolov ◽

Vladimir V. Kharitonov ◽

Aleksandra A. Shaeva

Keyword(s):

Discount Rate ◽

High Speed ◽

Financial Burden ◽

Investment Project ◽

Mathematical Expression ◽

Cash Flows ◽

Payback Period ◽

Operating Costs ◽

Investment Efficiency ◽

Capital Costs

An economic and analytical model for evaluating the criteria of efficiency (profitability) of investments in the projects of innovative nuclear icebreakers of the Northern Sea Route is suggested. The model is based on the new analytical representation of the methodology for forecasting the investment project efficiency that is widely used in international practice. The mathematical expression for the net discounted income provides convenient formulas for calculating several investment efficiency criteria for nuclear icebreakers: internal rate of return, minimum annual revenues from icebreaker convoys, discounted payback period, and the volume of delivered cargo. The paper gives estimates of the criteria for the efficiency of investments in “Leader” class icebreakers that depend on the discount rate of cash flows, capital, and operating costs. It is shown that at high capital costs, typical for construction of “Leader” class nuclear icebreakers, the minimum required revenue of an icebreaker, representing a financial burden for ships transporting cargo along the NSR, rapidly increases with the growth of discount rate and the reduction of investment payback period. This means that the profitability of such icebreakers is only possible at low discount rates of 2–3% per year, which is an extremely low-interest credit. Even with low interest and impressive technical characteristics of the icebreaker (high speed of navigation, large number of ships in the caravan and their maximum capacity) the payback period would exceed 25 years.

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Discounted Payback Period — A Viable Complement to Net Present Value for Projects with Conventional Cash Flows

The Journal of Cost Analysis ◽

10.1080/08823871.1989.10462376 ◽

1989 ◽

Vol 7 (1) ◽

pp. 43-53 ◽

Cited By ~ 4

Author(s):

Shyam B. Bhandari

Keyword(s):

Net Present Value ◽

Cash Flows ◽

Payback Period ◽

Present Value

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Computer Simulation Forecast of the Markov Chain for Payback Period of Construction Projects Investment

Advanced Materials Research ◽

10.4028/www.scientific.net/amr.671-674.3096 ◽

2013 ◽

Vol 671-674 ◽

pp. 3096-3099

Author(s):

Meng Fang Zhang ◽

Liang Huang ◽

Lu Yang Shan

Keyword(s):

Computer Simulation ◽

Markov Chains ◽

Cash Flow ◽

Construction Projects ◽

Transition Probability ◽

Economic Effect ◽

Cash Flows ◽

Scientific Basis ◽

Transition Probability Matrix ◽

Payback Period

The investment payback period of construction projects is an important index that evaluate and measure economic effect of project investment. It is difficult that the investment payback period of construction projects is calculated generally using analytic method.We established the mathematical model of the payback period, the annual net cash flows are Markov chains. According to the similar projects, collected net yearly cash flow and each quarter net cash flow, A one-step transition probability matrix was described by using the computer simulation of Markov chains, forecasted the dynamic and static payback period of construction projects investment. so as to provide the scientific basis data for decision makers.

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Why Do Firms Write Off Their Goodwill? A Comparison of Different Accounting Systems

FINANCIAL REPORTING ◽

10.3280/fr2015-001002 ◽

2015 ◽

pp. 23-40 ◽

Cited By ~ 1

Author(s):

Francesco Avallone ◽

Claudia Gabbioneta ◽

Paola Ramassa ◽

Marco Sorrentino

Keyword(s):

Good Deal ◽

Financial Statements ◽

Cash Flows ◽

Accounting System ◽

Anglo Saxon ◽

Accounting Systems ◽

Ifrs Adoption ◽

The Future

Increased comparability of financial statements across adopting countries is one of the main objectives of IFRS adoption. The level of achievement of this objective, however, is still debatable. While some studies have documented that crosscountry comparability of financial statements has increased after IFRS adoption, other studies have found that comparability has actually decreased since 2005. We contribute to this debate by studying whether the motivations for goodwill writeoff are the same or vary across countries with different accounting systems. Although a good deal of research has investigated the motivations for goodwill writeoff, our study is the first to analyze whether these motivations vary across countries with different accounting systems. We find that firms that expect low cash flows in the future are more likely to report goodwill write-offs if they are located in countries with an Anglo-Saxon accounting system than if they are located in countries with a Continental accounting system. These results suggest that IFRS are "interpreted" differently in different countries and that harmonization of financial statements has not been fully achieved yet.

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Recovering waste energy of the combined gas turbine system using paraffin melting

JOURNAL OF MECHANICAL ENGINEERING AND SCIENCES ◽

10.15282/jmes.14.4.2020.15.0589 ◽

2020 ◽

Vol 14 (4) ◽

pp. 7481-7497

Author(s):

Yousef Najjar ◽

Abdelrahman Irbai

Keyword(s):

Melting Process ◽

Payback Period ◽

Energy Utilization ◽

Raw Material ◽

Heat Transfer Fluid ◽

Layered System ◽

Exhaust Gas ◽

Gas Temperature ◽

Power Cycle ◽

Waste Energy

This work covers waste energy utilization of the combined power cycle by using it in the candle raw material (paraffin) melting process and an economic study for this process. After a partial utilization of the burned fuel energy in a real bottoming steam power generation, the exhaust gas contains 0.033 of the initially burned energy. This tail energy with about 128 ºC is partly driven in the heat exchanger of the paraffin melting system. Ansys-Fluent Software was used to study the paraffin wax melting process by using a layered system that utilizes an increased interface area between the heat transfer fluid (HTF) and the phase change material (PCM) to improve the paraffin melting process. The results indicate that using 47.35 kg/s, which is 5% of the entire exhaust gas (881.33 kg/s) from the exit of the combined power cycle, would be enough for producing 1100 tons per month, which corresponds to the production quantity by real candle's factories. Also, 63% of the LPG cost will be saved, and the payback period of the melting system is 2.4 years. Moreover, as the exhaust gas temperature increases, the consumed power and the payback period will decrease.

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