When computing the payback period for a capital asset with equal annual net cash inflows,which of the following is used as the equation's numerator?

Question

Quizplus · Accepted Answer

The amount invested, also known as the initial outlay or cost of the asset, is used as the numerator in the payback period formula. This is because the payback period measures the length of time it takes for the initial investment to be recovered through the cash inflows generated by the asset. The other options, such as the expected or total cash inflows, are used in other financial calculations and are not relevant to the payback period. The net cash outflow would be a negative number and therefore not appropriate as the numerator.

When Computing the Payback Period for a Capital Asset with Equal