The length of time required for an investment to generate cash flows sufficient to recoup the...
The length of time required for an investment to generate cash flows sufficient to recoup the initial cost of the investment is called the
a.
Net present value
b.
Profitability index
c.
Payback period
d.
Internal rate of return
e.
Discounted cash period
Homework Answers
c) Payback Period
Payback period is the number of years it takes to re-earn the cash invested.
Net present value is the difference between the initial invested amount and PV of future expected cash flows.
Profitability index is the ratio of PV of future expected cash flows and initial investment.
IRR is the discount rate at which NPV is 0.
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