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A Refresher on Payback Method

Harvard Business Review

There are a variety of ways to calculate a return on investment (ROI) — net present value , internal rate of return , breakeven — but the simplest is payback period. What is payback period? ” The shorter the payback period, the better. ” This can lead to some deceiving calculations.

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An HBR Refresher on Breakeven Quantity

Harvard Business Review

I talked with Jill Avery, a senior lecturer at Harvard Business School and co-author of HBR’s Go To Market Tools , to better understand how to use this important calculation. “It’s a pretty universal tool. The formula will tell the manager how many units will result in $10 million in profit. BEQ = 200 units.

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Why We Need to Update Financial Reporting for the Digital Era

Harvard Business Review

Business students have traditionally considered net present value, payback period, and hurdle rates as necessary tools to determine which project to select. So, investors, and therefore managers, might be adjusting their approach to risk accordingly. Traditional companies therefore rely on two strategies.

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