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When Computing the Payback Period for a Capital Asset with Equal

question 201

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When computing the payback period for a capital asset with equal annual net cash inflows, which of the following is used as the equation's numerator?


Definitions:

Equity

The value of an ownership interest in property or a business, after deducting liabilities from assets.

Return on Sales Ratio

A financial ratio that measures the efficiency of a company in generating operating profit from its revenue.

Net Sales

The revenue a company earns from sales after subtracting the costs of returns, allowances for any damaged or missing items, and discounts.

Net Income Before Taxes

The total earnings of a company before taxes have been deducted.

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