Understanding PBP
PBP is the number of years it takes to recover the initial investment from project inflows. As mentioned at the beginning of the chapter, this method is usually calculated without considering the time value of money. You would accept projects with PBPs less than the industry average or a standard set by top management. The project with the shortest payback period is the most desirable. The payback period is very important to all projects as it indicates when the invested funds will be available for other projects.
