The Payback Period Is the Length of Time It Takes

question 83

Multiple Choice

The payback period is the length of time it takes an investment to generate sufficient cash flows to enable the project to:

• A)produce a positive annual cash flow.
• B)produce a positive cash flow from assets.
• C)offset its fixed expenses.
• D)offset its total expenses.
• E)recoup its initial cost.

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Definitions:

Profit Centers

Refers to distinct parts of a business that directly contribute to the company's profit through their operations and performance assessment.

Direct Expenses

Costs that can be directly attributed to the production of specific goods or services, such as raw materials and labor.

Allocation

The process of distributing resources or costs among various accounts or departments based on a specific criteria.

Departments

Distinct areas within an organization, each specializing in specific functions or tasks.