When a capital investment is expected to provide unequal annual cash inflows,the payback period can be calculated by accumulating the incremental cash inflows until the sum equals the amount of the original investment.

Question

Quizplus · Accepted Answer

This is a correct statement. The payback period is a method of evaluating the profitability of a capital investment by calculating the time period required to recover the initial investment. If the cash inflows are not equal, the incremental cash inflows are accumulated until they add up to the original investment amount, which is used to determine the payback period.

When a Capital Investment Is Expected to Provide Unequal Annual