Payback Without Apology

Boyle, Glenn; Guthrie, Graeme

DSpace Home
→
ResearchArchive–Te Puna Rangahau
→
The New Zealand Institute for the Study of Competition and Regulation · ISCR
→
View Item

Payback Without Apology

Boyle, Glenn; Guthrie, Graeme

URI: https://ir.wgtn.ac.nz/handle/123456789/18957

Date: 2006

Rights: Permission to publish research outputs of the New Zealand Institute for the Study of Competition and Regulation has been granted to the Victoria University of Wellington Library. Refer to the permission letter in record: https://ir.wgtn.ac.nz/handle/123456789/18870

Abstract:

When interest rates are uncertain the net-present-value threshold required to justify an irreversible investment is increasing in the length of a project's payback period. Thus slowpayback projects should face a higher hurdle than fast-payback projects just as investment folklore suggests. This result suggests that the widely disparaged use of payback for capital budgeting purposes can be an intuitive response to correctly perceived costs and benefits.

Show full item record