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15) What is the model used to calculate the time it takes to recover the initial...

15) What is the model used to calculate the time it takes to recover the initial investment in current dollars?

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Answer #1

The model used to calculate the time it takes to recover the initial investment in current dollars is the discounted payback period.

Discounted Payback period represents the time period in which the initial investment in a project is recovered by discounting the future cash flows, which implies that it takes in to consideration the time value of money concept.

The lower the discounted payback period of a project, the better it is for a firm, since it implies that the initial investment has taken lesser time to recover from the discounted value of future cash flows.

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