The amount of time required before a project's total inflows match its total outflows is the
A) Break-even period
B) Payback period
C) Duration
D) Yield to maturity

Question

Quizplus · Accepted Answer

The amount of time required before a project's total inflows match its total outflows is called the payback period. It signifies the length of time required to recover the initial investment, and any investment beyond that period is considered profit. Choice A is incorrect because the break-even period refers to the level of sales at which revenue equals fixed and variable costs. Choice C is incorrect because duration refers to the weighted average of the time until each cash flow is received or paid, and Choice D is incorrect because yield to maturity is the total return anticipated from holding a bond until it matures.

The Amount of Time Required Before a Project's Total Inflows