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Payback analysis is important in determining the amount of time it will take for a project to recoup its investments. This is the point at which the benefits start to outweigh the costs. The best way to see that is by charting the cumulative benefits and costs. As you can see in the example in Figure 7.7 Payback Analysis Chart. , the cumulative benefits outweigh the cumulative costs in the second year.
Figure 7.6 Table of NPV of costs and benefits.
Figure 7.7 Payback Analysis Chart.
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