The ____ of an investment is the period of time for the ____ to equal the initial cash outlay.
A) profitability index; present value of the cash inflows
B) payback period; cumulative cash inflows
C) payback period; present value of the cash inflows
D) none of the above

Question

Quizplus · Accepted Answer

The question is referring to the payback period, which is the amount of time it takes for the cumulative cash inflows to equal the initial cash outlay. Therefore, option B is the correct answer. Option A refers to the profitability index, which is a measure of the present value of future cash inflows relative to the initial investment. Option C combines the payback period with the present value of the cash inflows, which is not what is being asked for in the question. Option D is incorrect because there is a correct answer.

The ____ of an Investment Is the Period of Time