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The cash payback period is: Select one: A. The number of years needed on an investment for the after-tax cash flows to equal the original investment B. The number of years of positive after-tax cash flows needed to make the net present value of an investment equal 0 C. The number of years of positive after-tax cash flows, discounted to the present period, needed to equal the original investment D. The total time that an investment will return positive after-tax cash flows E. None of the above

Respuesta :

Answer:

A

Explanation:

Cash payback calculates the amount of time it takes to recover the amount invested in a project from it cumulative cash flows

Cash payback is a method of capital budgeting

Other methods of capital budgeting includes :

  1. Net present value
  2. Internal rate of return
  3. profitability index

Payback period = Amount invested / cash flow

for example, 10,000 was invested in a project. the cash flows from the project is 2000 per year for 10 years

the cash payback = 10,000/2000 = 5 years

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