Which of the following best defines payback period?
A)It is the number of time periods before the cash inflows of a proposed project exceed the amount of the initial investment.
B)It is the number of time periods before the amount of the initial investment exceeds the cash inflows of a proposed project.
C)It is the number of time periods before the cash inflows of a proposed project equal the amount of the initial investment.
D)It is the number of time periods before the net expenditure exceeds the amount of the initial investment.

Question

Quizplus · Accepted Answer

The payback period is defined as the amount of time it takes for the cash inflows from a project to equal the initial investment cost. This metric is used to evaluate the time it will take for an investment to "pay back" the initial expenditure.

Which of the Following Best Defines Payback Period