What Does the Payback Method Measure

question 122

Multiple Choice

What does the payback method measure?

• A) How quickly investment dollars may be recovered.
• B) The cash flow from an investment.
• C) The economic life of an investment.
• D) The profitability of an investment.

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Definitions:

Contractual Liability

The responsibility and obligations that a party is subject to under the terms of a contract.

Without Recourse

A phrase indicating that the holder of a financial instrument cannot demand payment from the originator if the instrument fails to pay.

Indorser

A person or entity that signs the back of a negotiable instrument, thereby transferring ownership or guaranteeing payment to another party.

Negotiable

A term that describes the transferable nature of certain documents or instruments, such as checks, which can be legally and freely passed from one party to another.