Question

"The technique which identifies the time period required to recover the cost of the investment is called the" ________________ method.

Answer 1

Cash payback method

Step-by-step explanation:

Cash payback technique is a method used by financial experts to analyse capital projects to see which ones they can invest in and which one to avoid.

This method is used to estimate the time it will take for a project to recoup the original cost of investment. It estimated when a business will payoff initial cost and start giving the investor profit.

Cash payback is easy to calculate

Cash payback = (Initial investment) ÷ (Estimated cash inflows each year)

Shorter cash payback is favourable as the investor gets back initial cost in a shorter period.