Traditional Culture Encyclopedia - Hotel reservation - What is the relationship between internal rate of return and static payback period?
What is the relationship between internal rate of return and static payback period?
Generally speaking, the internal rate of return meets the investment requirements, and the static investment payback period must meet the requirements. On the other hand, if the static investment payback period meets the requirements, the internal rate of return may not necessarily meet the investment requirements.
(1) In the case of internal rate of return, the original investment amount = the net cash flow that is equal every year after the production is put into production × the annuity present value coefficient. Therefore, the annuity present value coefficient = the original investment amount / the equal every year after the production is put into production. The net cash flow of
(3) According to the meaning of the question, the "equal net cash flow per year after production is put into operation × the production and operation period" in this question must be greater than the original total investment (otherwise there will be no investment payback period), so this question satisfies the " "The investment payback period excluding the construction period" simplified formula calculation conditions; (Note: "The net cash flow is equal every year after the production is put into operation" is a special case of "the operating cash flow is equal every year in the first few years after the production is put into operation")
(4) According to the above analysis, it can be seen that the annuity present value coefficient of this question = original investment / equal net cash flow every year after production = investment payback period excluding the construction period = investment payback period including the construction period = 4 (years) expansion Information
The static investment payback period can be calculated based on the cash flow statement. The specific calculation is divided into the following two situations:?
1) The net income in each year after the project is completed and put into production (i.e. Net cash flow) are the same, then the calculation formula of the static investment payback period is as follows: P t =K/A?
2) If the net income in each year after the project is completed and put into production is different, then the static investment payback period It can be found based on the cumulative net cash flow, which is the years between the cumulative net cash flow turning from negative to positive in the cash flow statement.
The calculation formula is:?P t =The number of years when the cumulative net cash flow begins to show positive value-1 The absolute value of the cumulative net cash flow in the previous year/The net cash flow in the year when the positive value appears?
Evaluation criteria?
Compare the calculated static investment payback period (P t ) with the determined benchmark investment payback period (Pc):?
l) If P t ≤ Pc, it means that the project investment can be recovered within the specified time, and the plan can be considered acceptable;?
2) If P t gt; Pc, then the plan is not feasible.
Baidu Encyclopedia - Internal Rate of Return
Baidu Encyclopedia - Static Investment Payback Period
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