For Payback Period we have terms and definitions in 3 topics. The topics are Accounting, Economics and Natural Gas.

Payback Period (Accounting)

in capital budgetingis the length of time needed to recoup the cost of CAPITAL INVESTMENT. The payback period is the ratio of the initial investment (cash outlayregardless of the source of the cash) to the annual cash inflows for the recovery period. The major shortcoming for the payback period method is that it does not take into account cash flows after the payback period and is therefore not a measure of the profitability of an investment project. For this reasonanalysts generally prefer the DISCOUNTED CASH FLOW methods of capital budgeting; primarilythe INTERNAL RATE OF RETURN and the NET PRESENT VALUE methods.

Payback Period (Economics)

A criteria for investment decisions; the number of periods of time required for an investment's cost savings and revenues to equal the amount of the investment with no interest. See also discounted payback period.

Payback Period (Natural Gas)

The time required for the cumulative operational saving of a DSM (or other) option to equal the investment cost of that option.

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