Evan Cram is considering an investment in a solar-powered irrigation system manufacturer.The initial investment is $200,000.He expects to receive cash income of $100,000 a year.What is the payback period?

Question

Quizplus · Accepted Answer

The payback period is the time it takes for an investment to generate an amount of income or cash equal to the cost of the investment. Here, with an initial investment of $200,000 and an annual cash income of $100,000, it would take 2 years ($200,000 / $100,000 per year) to recover the initial investment.

Evan Cram Is Considering an Investment in a Solar-Powered Irrigation