Hello professor,
I wanted to ask if i understood it correctly:
When i have to calculate the payback period i only consider the the cash flows of the project not discounted and i refer to the whole period (ex. if i have payments at y 3 and y 4 and the payback will happen around mid year, i put 4 y as answer).
On the other hand, if i have to calculate the profitability index of a project, do i have to use discounted future cash flows or not discounted ones? From what i understood i should use the discounted ones, but i would like to be more sure about it.
Thanks