understanding financial jargon
Discounted payback is a way of calculating the payback period while taking into account the 'time value' of money. For example, if a project costs £50,000, takes one year before income starts to flow, and then receives profits of £10,000 per year, the purchasing power of the money received in later years will be reduced by inflation compared to the purchasing power of the initial project outlay.
The discounted payback method seeks to represent a payback period which is a more realistic value based on the purchasing power of future profits, expressed in todays money.
What to do if you need more help
If you need more help with your specific commercial loan, mortgage or insurance requirement please speak to a professional financial adviser.
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