The payback period is the time it takes to recover the early cash outflows, so option A is the correct choice. Option B is incorrect because the calculation is relatively simple and not tedious. Option C is incorrect because the payback period does not refer to cash inflows. Option D is incorrect because the payback period calculation does not involve time value of money techniques.

Solved

The Payback Period

Question 101

Multiple Choice

The payback period:

A) is the time it takes to recover early cash outflows.
B) requires a long and tedious calculation.
C) is the time it takes to recover early cash inflows.
D) is calculated using time value of money techniques.

Correct Answer: