The Payback Period Is Defined as

question 113

Multiple Choice

The payback period is defined as

• A)The amount of time,in years,that it takes the company to provide investors a return on the capital.
• B)The amount of time,in years,that it takes for an investment to return the original amount of the capital plus the required internal rate of return.
• C)The amount of time,in years,that it takes the company to earn enough profit generated from the capital asset to pay for it.
• D)The amount of time,in years,that it takes for an investment to return the original amount of invested capital.

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Definitions:

Transfer Price

The price at which goods, services, or intellectual property are traded between divisions within the same organization.

Market Price

The current price at which a good or service can be bought or sold in a marketplace.

Marginal Cost

The change in total cost that arises when the quantity produced is incremented by one unit.

Downstream Division

Pertains to the part of a corporation involved in the refinement, processing, and sale of the end products derived from raw materials.