This technique for evaluating capital projects tells how long it will take a firm to earn back the money invested in a project.
A) payback
B) internal rate of return
C) net present value
D) profitability index

Question

Quizplus · Accepted Answer

The technique described is payback, which calculates the time it takes for a project to generate enough cash flow to recover the initial investment. Internal rate of return (B) measures the profitability of a project, net present value (C) calculates the sum of the present value of expected cash flows minus the initial investment, and profitability index (D) calculates the ratio of the present value of cash inflows to the initial investment.

This Technique for Evaluating Capital Projects Tells How Long It