The Payback Period of a Project That Costs $1,000 Initially

question 164

True/False

The payback period of a project that costs $1,000 initially and promises after-tax cash inflows of $300 each year for the next three years is 0.333 years.

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Definitions:

Capital

Resources such as machinery, buildings, and equipment used in the production of goods and services.

Dormitories

Residential facilities provided by educational institutions for students to live in.

Implicit Costs

The opportunity costs that arise from using resources that could have been employed in an alternative use but were instead utilized in the current operation without direct payment.

Explicit Costs

Direct, out-of-pocket payments for goods and services used in the production of a product or provision of a service.