Payback Period Revisited: Usefulness In Estimating Economic Returns

During the daily work financial analyst usually is being asked several questions about the long term investment decision making. The business suffers on these kinds of questions. On one hand, they want to implement the corporate long term strategy and the corresponding long term investment projects; on the other hand they cannot find a powerful and useful tool to help them make quick decisions. To play a key role finance analyst is responsible for helping the business to set up a proper process of decision making and create a tool to facilitate the process of decision making.This thesis has five parts. The first part is introduction; the second part is the background and summary on long term investment decision method and capital budgeting; the third part is about the definitions of long term investment methods and how to calculate them and the comments from the scholar; the fourth part is the core part with the point that payback period is useful on economic evaluation process; the fifth part mentions a model on how to select the method and the summary of this thesis.