The payback period:
A)indicates how quickly the investment money will be returned in the form of cash inflows or savings.
B)can be determined by using depreciation values.
C)is in no way a determination of personal risk involved in any buying decision made by a purchasing agent.
D)requires that the buyer know the net present value of his or her investment in order to calculate.
E)is accurately described by all of the above.

Question

Quizplus · Accepted Answer

The payback period is a financial method used to calculate the amount of time it takes for an investment to generate enough cash inflows or savings to recover its initial cost. It does not require knowledge of depreciation values or net present value and can be used to assess personal risk involved in the investment decision.

The Payback Period