3. Finance and Accounts
Payback Period — Quiz
Test your understanding of payback period with 5 practice questions.
Practice Questions
Question 1
What does the payback period measure in business finance?
Question 2
Which statement best describes how the payback period is calculated?
Question 3
A project costs $8,000$ and generates equal net cash inflows of $2,000$ per year. What is the payback period?
Question 4
A project costs $15,000$. It brings in net cash inflows of $5,000$ in year $1$, $4,000$ in year $2$, and $6,000$ in year $3$. What is the payback period?
Question 5
Why might a business prefer a project with a shorter payback period?