A Study on Payback Method in Capital Budgeting Decision
A Study on Payback Method in Capital Budgeting Decision Abstract Purpose – To examine the significance of utilising the payback approach in making capital budget choices in comparison to other evaluation methods utilized in companies for capital budgeting decisions. The study also looked at the significance of the payback approach in terms of simplicity, management incentive compensation, and business scale. Design/methodology/approach – To evaluate the significance of the payback method in capital budgeting, the author utilized conceptual analysis utilising theories on payback period in which secondary data from previous research in African, European, and American businesses were examined. Findings – According to the research, the payback approach is favored in evaluating capital budget choices in different companies due to its simplicity, liquidity, and risk evaluation, among other benefits. Managers should use additional techniques in addition to the payback method to make good inve...