Asked by Diana Morrissey on Apr 29, 2024
Verified
The payback period is the length of time it takes for an investment to recoup its own
initial cost out of the cash receipts it generates.
Payback Period
The amount of time it takes for an investment to generate cash flows sufficient to recover its initial cost.
Cash Receipts
Money received by a business during a given period, from operations, investments, and financing.
- Define and calculate the payback period for an investment.
Verified Answer
TB
Turky BasahelMay 02, 2024
Final Answer :
True
Explanation :
The payback period is calculated by dividing the initial cost of the investment by the annual cash inflows. It does not take into account the time value of money or the cash flows beyond the payback period.
Learning Objectives
- Define and calculate the payback period for an investment.
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