Which one of the following capital budgeting decision models consists of dividing the total initial investment outlay by annual after-tax cash inflows (when such inflows are assumed equal over time)?
A) Profitability index (PI).
B) Payback period.
C) Book (accounting) rate of return (ARR).
D) Internal rate of return (IRR).
E) Adjusted payback period.

Question

Quizplus · Accepted Answer

The model described in the question is the Payback period. This model calculates the amount of time it takes for the cash inflows to equal the initial investment outlay.

Which One of the Following Capital Budgeting Decision Models Consists