Provide a half page single spaced response to each of the following questions. Cite two sources (APA) for each question and indicate for which question the source was used. No Title Page required
Describe in detail the following investment criteria: Payback Rule, the Discounted
Payback Rule, NPV, IRR and MIRR.
What are the weaknesses of each investment criteria (Payback, Discounted Payback, NPV, IRR)?
Investment criteria refers to a defined tool or a financial parameters that are used by investors and strategic buyers to determine, assess and calculate acquisition opportunities. Therefore, the paper explores in detail into the typical investment criteria, which include include; Payback Rule, Discounted Payback Rule, Net Present Value (NPV), Internal Rate of Return (IRR), and Modified Internal Rate or Return (MRR). Also, the paper examines the the weaknesses of each investment criteria.
Payback rule is a criteria that focuses on determining the amount of time (payback period) that will take for a particular investment to yield back returns (Vance, 2013). In other words, it simply means the time taken for and investor to recover the initial cost of investment from the cash inflows generated by investment (Vance, 2013). The formula for calculating the payback period primarily depends on whether the investment is generating