The length of time required to recover the initial cash outlay for a project is determined by using the
A)discounted cash flow method.
B)the payback method.
C)the net present value method.
D)the simple rate of return methoD.

Question

Quizplus · Accepted Answer

The Payback method is used to determine the length of time required to recover the initial cash outlay for a project. The discounted cash flow method and the net present value method are used to calculate the present value of future cash flows and evaluate the profitability of a project. The simple rate of return method calculates the average annual income earned from a project as a percentage of the initial investment. However, it does not consider the time value of money or the cash flows beyond the payback period. Therefore, the best choice to determine the length of time required to recover the initial cash outlay for a project is the payback method.

The Length of Time Required to Recover the Initial Cash