The payback year is the year in which the cumulative total cash flow is greater than or equal to ____.

Question

Quizplus · Accepted Answer

The payback year is the year in which the project generates enough cash flow to recover its initial investment. Therefore, the cumulative total cash flow needs to be greater than or equal to zero, which is the point at which the project has paid for itself. The other options (B, C, and D) are not correct because payback is not related to the value of the business, the amount of the last payment, or the original loan amount.

The Payback Year Is the Year in Which the Cumulative