Answers:
Payback period is a traditional method of evaluating investment in a project. The payback period is the duration of time taken to recover the initial cost of a project. The payback period method is an easy and quantitative in approach and does not take the TVM factor into account. The basic principle of the payback period method is that if the initial cost of a project is recouped in a shorter period of time, the project is said to be profitable.