If the annual cash flows are an annuity (equal each period), payback is calculated as

Name: If the annual cash flows are an annuity (equal each period), payback is calculated as
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Quizplus · Accepted Answer

Payback period is the time taken to recover the initial investment. In an annuity, the annual net cash inflows are equal each period. Therefore, dividing the initial investment by the annual net cash inflows will give the number of periods required to recover the initial investment, which is the payback period.

If the Annual Cash Flows Are an Annuity (Equal Each