Payback perod , IRR, NPV (with solved Problems)

Project evolution and selection under capital budgeting

• Payback Period 
• IRR   ( Internal Rate of Return)
• NPV ( Net Present Value)

Payback Period
The Payback period of invest projects tell us the number of years required to recover our initial cash investment based on the project expected cash flow.

Criteria
 if the payback period calculated is less then some maximum acceptable payback period the project is is accepted if not then rejected. if the require payback period were three years our project would be accepted. 

Internal Rate of Return 
The IRR for an investment proposal is the discount rate that equates the present value of the expected net cash flows (CFs) with the initial cash outflow (ICO). if the initial cash outflow or cost occurs at time 0, it is represented by that rate IRR.