The length of time a firm must wait to recoup the money it has invested in a project is called the:
A) internal return period.
B) payback period.
C) profitability period.
D) discounted cash period.
E) valuation period.

Question

The length of time a firm must wait to recoup the money it has invested in a project is called the: 
A) internal return period. 
B) payback period. 
C) profitability period. 
D) discounted cash period. 
E) valuation period.

Quizplus · Accepted Answer

The term "payback period" refers specifically to the length of time it takes for a firm to recoup the money it has invested in a project. It is calculated by dividing the initial investment by the expected annual cash inflows. The payback period is a relatively simple measure of a project's financial viability that is commonly used by small businesses and entrepreneurs. However, it does not take into account the time value of money or other factors that can affect the profitability of a project over the long term, so it should be used in conjunction with other financial metrics to make informed decisions about investments.

The Length of Time a Firm Must Wait to Recoup