An uncovered cost at start of year is divided by full cash flow during recovery year then added in prior years to full recovery for calculating__________?
Correct answer: C. Payback period
- A. Original period
- B. Investment period
- C. Payback period
- D. Forecasted period
Explanation
The payback period adds the complete years before recovery to the unrecovered investment at the start of the recovery year divided by that year’s cash flow. This measures how long the initial investment takes to be recovered.
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About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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