The Length of Time Required for an Investment to Generate

question 2

Multiple Choice

The length of time required for an investment to generate cash flows sufficient to recover the initial cost of the investment is called the:

• A) Net present value.
• B) Internal rate of return.
• C) Payback period.
• D) Profitability index.
• E) Discounted cash period.

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Definitions:

Selling and Administrative

Expenses associated with the company's efforts to sell its products and manage the overall organization, excluding production costs.

Variable Cost

A cost that changes in proportion to the level of output or activity in a company.

Fixed Cost

Costs that remain constant in total, regardless of changes in the level of production or sales volume, such as rent, salaries, and insurance.

Budgeted Fixed Expenses

Estimated costs that do not change with the level of activity within a certain range and time period.