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The payback period is a method of capital budgeting that is used to measure the length of time required for an investment to generate cash flows sufficient to recover the initial investment cost.
It measures the time in which the initial outlay of an investment is expected to be recovered through the cash inflows generated by the investment.
The Net present value(NPV) is a capital budgeting technique used in measuring the profitability of a project by comparing the cash inflows of a project to its cash outflows in a manner that accounts for the time value of money.
It involves measuring the difference between the present value of cash inflows and the present value of cash outflows over the lifespan of an investment.
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