Investments with longer payback periods are more desirable, all else being equal. This statement is true.
If everything else is equal, investments with longer payback periods are preferable. When the net cash inflows from a capital investment are not equal, the payback method may be applied. Predictions for capital spending must take into account variables such shifting customer preferences, competition, and governmental laws.
Since the initial investment is at risk for less time, investments with shorter payback periods are thought to be preferable. The payback technique is the formula used to determine the payback time. In terms of years and fractions of years, the payback period is expressed.
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