The payback period of a project that produces even cash flows each year is calculated by dividing the
A)net initial investment by the projected net annual cash flow.
B)gross initial investment by the projected net annual cash flow.
C)net initial investment by the projected annual cash inflows.
D)gross initial investment by the projected annual cash inflows.

Question

Quizplus · Accepted Answer

The payback period for a project with even annual cash flows is calculated by dividing the net initial investment by the projected net annual cash flow. This method helps determine how long it will take to recover the initial investment from the cash flows generated by the project.

The Payback Period of a Project That Produces Even Cash