Answer
No, cash payback formula and the annual rate of return formula are not same.
Work Step by Step
No, cash payback formula and the annual rate of return formula are not same.
Cash payback measures the time required to recover the initial investment from cash inflows::
$\text{Cash Payback Period}=\frac{\text{Initial Investment}}{\text{Annual Cash Inflow}}$
Annual Rate of Return (ARR) Technique measures the average accounting profit as a percentage of the initial investment:
$\text{ARR}=\frac{\text{Average Annual Accounting Profit}}{\text{Initial Investment}}\times 100$
So cash payback focuses on time to recover cash, while ARR focuses on accounting profit relative to investment.
