The payback period measures
A)the present value of an investment.
B)the actual cost of an investment.
C)the time, in years, for an investment to return the original amount of invested capital.
D)the profit that is recovered during the capital asset's useful life.

Question

Quizplus · Accepted Answer

The payback period is the length of time it takes for an investment to generate enough cash flow to recover the original amount of invested capital. It's usually expressed in years, and it's a useful tool for evaluating the time it takes for a business to break even on an investment. A shorter payback period generally indicates a lower risk investment, while a longer payback period may indicate a riskier investment. Therefore, the correct choice is C.

The Payback Period Measures