Payback period sensitivity analysis helps to understand how sensitive is the payback period with respect to actions taken by management, such as, changes in prices, or market share (quantities sold) or reduction in costs.
Payback period sensitivity analysis helps to understand how elastic is the payback period with respect to actions taken by management, such as, changes in prices, or market share (quantities sold) or reduction in costs.
Shareholders and investors are interested to know how effective are management actions to reach payback sooner than later, as it has a direct impact on, both, profitability and liquidity.
To appreciate how to measure the elasticity of the payback period as a function of management actions the following financial simulations
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