The Formula for Computing the Payback Period Is

question 14

Multiple Choice

The formula for computing the payback period is:

• A) Investment cost divided by annual revenues from investment
• B) Investment cost divided by annual net cash inflows
• C) Net cash inflows divided by investment cost
• D) Annual revenues from investment divided by investment cost

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Definitions:

U.S. Treasury Note

A marketable U.S. government debt security with a fixed interest rate and a maturity between one and ten years.

Accrued Interest

The interest that has accumulated on a bond or other fixed-income security since the last interest payment was made.

Settlement

The process of exchanging payment for financial transactions, including securities, at their completion.

Semiannual Coupon

Bonds that pay interest to the holder twice a year.