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1. What is the difference between payback period and discounted payback period? Do you know any...

1. What is the difference between payback period and discounted payback period? Do you know any projects that used these two capital budgeting techniques?

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The difference between the two is that of using the interest rates to discount the cash flows in discounted payback and using the numbers without any discounting in the payback period. Discounted payback method gives a better understanding and deals with the time value of money also but that is not the case with the payback method.

These two techniques can be used in projects where more than profitability, the firm is concerned about when the investment made is returned back to the investor. Hence, it can be used in government projects where the motive of the project is not profits but convenience to the people.

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