Asked by Fatima Santos on Jul 04, 2024
Verified
The payback period for the investment is:
A) 5 years
B) 15 years
C) 2 years
D) 7.143 years
Payback Period
The amount of time it takes for an investment to generate an amount of income or cash equivalent to the cost of the investment.
Investment
The allocation of resources, such as capital, time, and effort, in something to earn a return or achieve a goal.
- Evaluate the importance of the payback period in analyzing investment risk and return.
Verified Answer
ZK
Zybrea KnightJul 05, 2024
Final Answer :
A
Explanation :
Payback period = Investment required ÷ Annual net cash inflow
= $30,000 ÷ $6,000 per year = 5 years
= $30,000 ÷ $6,000 per year = 5 years
Learning Objectives
- Evaluate the importance of the payback period in analyzing investment risk and return.