Discuss the relevance of Payback reciprocal in capital budgeting decisions. OR Explain the features of crowd funding.

Reciprocal of the payback would be a close approximation of the Internal Rate of Return if the life of the project is at least twice the payback period and the project generates equal amount of the annual cash inflows. The payback reciprocal is a helpful tool for quick estimation of rate of return of a project provided its life is at least twice the payback period. It may be calculated as follows: Payback Reciprocal = Average annual cash flows/initial Investment Or Payback Reciprocal = 1 / payback period OR (c) Crowd funding: crowdfunding means raising money for an individual or organisation from a group of people to fund a project, typically via internet (social media and crowdfunding websites). It generally involves collecting funds from family, friends, strangers, corporates and many more in exchange of equity (known as Equity funding), loans (known as P2P lending) or nothing at all (i.e. donation). This source of funding also helps start-up to substantiate demand for their product before entering into production. In the crowdfunding process, three parties are involved i.e. fund raiser, mediator and fund investor. The platforms (mediator) may also charge certain fees in the form of processing fee, transaction fee, etc. either as a fixed amount or a percentage or in combination of both.