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The Payback Period could be computed using the Simple Payback or the Discounted Payback methods, in...

The Payback Period could be computed using the Simple Payback or the Discounted Payback methods, in your opinion which do you think is better to use, and why? Give an example of how different the payback period method utilize will affect the selection of an alternative.

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It would always be better to use the discounted payback formula because of the fact that can give you the real idea of of how much time it will take to recover the capital and if the discount rate is high and even the simple payback period It wouldn't be enough to judge the payback period is correct or not. Consider a case where I have to invest either 1 million in one machine or 2 million in other machine where the returns for the second machine as high when compared to that of the first and therefore using payback period formula I would choose the alternative whichever payback is less

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