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What is ERR and Payback Period Analysis about?
The document discusses two methods of evaluating project profitability: the external rate of return (ERR) and the payback period. The ERR method finds the interest rate where the future value of cash inflows equals the future value of cash outflows when reinvested at that rate. This accounts for reinvestment at a rate external to the project. The document provides an example calculation of ERR. The payback period is the number of years for cumulative cash flows to repay the initial investment. It does n
- Author
- Jenina Logmao
- Language
- EN