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There are a number of different evaluation methods that can be used to identify investment opportunities. One of these methods is known as the payback period method. The payback period method is defined as a fast way to evaluate potential capital investments, which is done by simply asking how long it will take to recover the net initial investment (Schneider, 2017). Using this method, the payback period is calculated, and if that period is less than the predetermined required time frame, the investment would be considered favorable. The predetermined required timeframe can vary from one company to another. The advantages of the payback period method are it is simple, offers quick evaluation, and the term is universal (it can be understood by anyone) (Schneider, 2017). This method uses the number of years to analyze capital projects/investments as opposed to using employees with different backgrounds (a more biased approach). This method allows for managers and leadership to determine which projects can generate fast returns, which is especially important for companies with limited resources. Some disadvantages are this method ignores the time value of money, emphasizes on liquidity rather than profitability, and only cash returns within the period are considered (Levy, 1968). A projects cash inflow could be irregular therefore this method would not be beneficial. For example, investments are typically long term and can continue to generate income over time. Income can generate even after the initial start-up capital has been paid but, if a project has a long payback period, the time value of money gets overlooked. I would not choose the payback method as my decision-making tool as I believe it is not the best method to use. The net present value (NPV) method is more superior and favorable as it takes into consideration the time value of money. Additionally, NPV evaluates the cost of capital and cash flows to determine how much funds go to the company. This can be defined as the difference between the investment and the present value of future returns discounted at a specific interest rate (Schneider, 2017).