The length of time required for an investment to generate cash flows sufficient to recover the initial cost of the investment is called the:
A)cash period.
B)net working capital period.
C)payback period.
D)profitability index.
E)discounted payback period.

Question

Quizplus · Accepted Answer

The given scenario describes the payback period, which measures the time required to recover the initial cost of an investment through the cash flows generated by the investment. The other options are not relevant in this context - the cash period refers to the length of time cash is held for operational purposes, the net working capital period measures the time required to convert current assets into cash, the profitability index is a measure of an investment's profitability, and the discounted payback period measures the length of time required to recover an investment's costs in present value terms.

The Length of Time Required for an Investment to Generate