Liquidity

We have examined five basic methods for evaluating the financial profitability of a single project: PW, AW,
FW, IRR, and ERR. These methods lead to the use of simple decision rules for economic evaluation of
projects.
Discuss the two supplemental methods for assessing a project’s liquidity: the simple payback period and the
discounted payback period. Pick one and describe what the advantages and disadvantages would be in
comparison to the other option.

Sample Solution

ACED ESSAYS