The Calculation of the Payback Period for an Investment When

question 26

Multiple Choice

The calculation of the payback period for an investment when net cash flow is even (equal) is:

• A) Cost of investment/Annual net cash flow
• B) Cost of investment/Total net cash flow
• C) Annual net cash flow/Cost of investment
• D) Total net cash flow/Cost of investment
• E) Total net cash flow/Annual net cash flow

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Definitions:

Liabilities With Priority

Obligations that are given preferential treatment over other liabilities, often paid first in a liquidation scenario.

Total Assets

The cumulative total of all resources owned by an entity, including cash, investments, property, and other assets that have economic value.

Liabilities With Priority

Financial obligations that are given precedence over other debts of a company in the event of a liquidation or bankruptcy.

Unsecured Creditors

Creditors who have lent money without taking any assets as security, hence they bear a higher risk compared to secured creditors.