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Practice Questions
Test your understanding with targeted questions related to the topic.
Question 1
Easy
Define Payback Period.
💡 Hint: Think about cash flow recovery time.
Question 2
Easy
What is the formula for calculating PBP?
💡 Hint: Remember what you divide by what.
Practice 4 more questions and get performance evaluation
Interactive Quizzes
Engage in quick quizzes to reinforce what you've learned and check your comprehension.
Question 1
What is the main focus of the Payback Period?
- To determine profitability
- To find cash inflows post-investment
- To calculate recovery time of investment
💡 Hint: Focus on recovery terms.
Question 2
True or False: The Payback Period considers all cash flows over the life of the project.
- True
- False
💡 Hint: Recall the limitations of PBP.
Solve and get performance evaluation
Challenge Problems
Push your limits with challenges.
Question 1
A company is considering a project with an initial investment of $50,000. The cash inflow for the first four years is expected to be $10,000 each year, and in the fifth year, the cash inflow will rise to $30,000. Calculate the PBP.
💡 Hint: Add cash inflows year by year to see the point of recovery.
Question 2
Analyze a project that has a PBP of 2 years but provides very low profitability in subsequent years. Discuss the implications for the stakeholders.
💡 Hint: Consider the long-term vs. short-term benefits.
Challenge and get performance evaluation