What does the payback method measure?
A) How quickly investment dollars may be recovered.
B) The cash flow from an investment.
C) The economic life of an investment.
D) The profitability of an investment.

Question

Quizplus · Accepted Answer

The payback method measures how quickly investment dollars may be recovered. It is a simple method that looks at the amount of time it takes for the investment's cash inflows to equal its initial cost. This method does not take into account the profitability or economic life of an investment. Therefore, the correct answer is A.

What Does the Payback Method Measure