The payback period is the period of time it takes an investment to generate suff

Question

The payback period is the period of time it takes an investment to generate sufficient cash flows to:

recover the investment's initial cost.

A sunk cost is:

The Internal Growth rate of a firm is a function of:

1) b, the "plowback ratio"

2) the Dupont ratio

3) the equity multiplier

4) the EPS

5) the PE ratio

1) earn the required rate of return. 2) produce the required net income. 3) produce a yield equal to or greater than the market rate on similar investments. 4) have a cash inflow, rather than an outflow, for the year. 5)

recover the investment's initial cost.

A sunk cost is:

1) the value of an asset currently owned by a firm. 2) a cost for which there is no alternative option. 3) another name for a fixed cost. 4) a cost that has already been incurred and cannot be recouped. 5) a form of erosion.

Explanation / Answer

A.The payback period is the time period that an investment has taken to generate sufficient cash flows to

5.Recover the investment initial cost.

     Payback period = Initial Investment / cash flow per period

B.A sunk cost is

4.a cost that has already been incurred and cannt be recouped.

Examples:Advertisig expenses,Depreciation,Rent

C.Internal growth rate of the firm is a function of

a.Plow back ratio

Plow ratio is the ratio at which the company reinvests into its own activities.

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