Paper 2 · investment appraisal, business ownership

In investment appraisal, what is the name of the technique that measures the length of time needed for the net cash inflows from a project to recoup its initial capital cost?

Model answer

payback period

Also accepted: payback, pay-back period

Explanation: The payback period is the time it takes for the cumulative net cash inflows generated by an investment to equal the amount originally invested in it.

Derived from ZIMSEC Business_studies Paper 2, November 2018, Q1

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In investment appraisal, what is the name of the technique that measures the length of time needed for the net cash inflows from a project to recoup its initial capital cost?

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