PROFITABILTY EVALUATION I ◆ Payout Time(Tpy) Time required to pay back initial investment (less cap Pay= Fixed Capital Start-Up//CF ◆ ROI and Pay E Approximate estimates of profitability Easily evaluated o Rigorous evaluation based on DCFROR(MBA's method 10/1899 Engineering economics ll10/18/99 Engineering Economics II 9 PROFITABILTY EVALUATION II t Payout Time (Tpay) Time required to pay back initial investment (less Wcap) Tpay = [Fixed Capital + Start-Up] / CF t ROI and Tpay ð Approximate estimates of profitability ð Easily evaluated t Rigorous evaluation based on DCFROR (MBA’s method)