Asked by Aleya Smith on Jul 14, 2024
Verified
When computing payback period,the date the initial capital investment is made is year 1.
Payback Period
The payback period is the length of time it takes for an investment to generate an amount of income or cash equivalent to the cost of the investment.
Initial Capital Investment
The total amount of money used to start a business or project, including costs for property, equipment, and legal fees.
- Appraise the significance of the payback period, internal rate of return (IRR), and net present value (NPV) in the context of investment decisions.
Verified Answer
AB
Ashley BaduraJul 17, 2024
Final Answer :
False
Explanation :
The date the initial capital investment is made is considered as year 0 in computing the payback period, as this is the point in time when the investment occurs, not a full year after the investment.
Learning Objectives
- Appraise the significance of the payback period, internal rate of return (IRR), and net present value (NPV) in the context of investment decisions.