The calculation of the payback period for an investment when net cash flow is even (equal) is:
A) Cost of investment/Annual net cash flow
B) Cost of investment/Total net cash flow
C) Annual net cash flow/Cost of investment
D) Total net cash flow/Cost of investment
E) Total net cash flow/Annual net cash flow

Question

Quizplus · Accepted Answer

The payback period is the amount of time it takes for the initial investment to be recouped through the net cash inflows generated by the investment. When the net cash flow is even or equal, the calculation is simply the cost of investment divided by the annual net cash flow. This gives the number of years it will take to recover the initial investment.

The Calculation of the Payback Period for an Investment When