Question

The expected amount of time to recover the initial amount of an investment is called the: Multiple Choice Amortization period. Payback period. Interest period. Budgeting period. Discounted cash flow period.

Answer 1

Answer: Payback Period

Step-by-step explanation:

Payback period refers to the length of time by which the initial cost of an investment is expected to be recovered or the break even point of which an investment expects to recoup the amount used up in an initial cost of investment.

A good payback period is one with the shortest Payback, time while longer payback periods are not desired for business investments.

To calculate Payback period, we use

amount of the investment / annual cash flow = Payback period.