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Compare and contrast payback period and NPV. (3-6 sentences)

Compare and contrast payback period and NPV. (3-6 sentences)

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Net present value is present value of cashflows less initial investment where as pay back period is time taken to recover and intial investment

Npv takes time value of money into consideration where as pay back period ignores time value of money

Npv calclates value added to firm by taking up the project where payback period cannot

Npv rule says that project with highest Npv shall be accepted where as payback period rule says that project with lowest payback shall be accepted

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