Livestock Economics, Marketing and Business Management

UNDISCOUNTED MEASURES

• They are the naïve (Simple) methods of ranking agricultural projects.
• The three important undiscounted measures are
  • Payback period
  • Proceeds per rupee of outlay
  • Average annual proceeds per rupee outlay

Pay Back Period

• Payback period is a simple technique of ranking project based on the actual period of time in which one can get back total investment.
  • Where, P is payback period.
  • I is the total investment made is the projects and
  • E is the net cash revenues / net revenues per annum.

Proceeds per rupee of outlay

• This is measured by dividing the total proceeds by the total investment.
• The projects are tanked by the highest by the higher magnitude of the parameter.

Average annual proceeds of rupee outlay

• This  is an another method choosing between the projects and measures by the following formula 

• The projects are estimated by the magnitude of the estimate
• The major drawback of the undiscounted measures is that for the same details of the project, it is possible to get different rankings.
• Thus undiscounted measures are inconsistent and incompatible in ranking.