The Payback Period Technique Measures How Long It Will Take

question 42

True/False

The payback period technique measures how long it will take to recover the initial cash outlay and the total amount of interest unearned over the payback period as an opportunity cost.

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Definitions:

Note Payable

A written promise to pay a specified amount of money, typically including interest, by a certain date.

Operating Cycle

The amount of time it takes for a company to purchase inventory, sell it, and convert the sales back into cash.

Interest Expense

The cost incurred by an entity for borrowed funds, representing interest payments made or accrued on outstanding debts.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, resulting in net income or loss.