payback period
What payback period means in Business A-Level, as defined for AQA, Eduqas.
Definitions of payback period
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Reference: AQA
The time taken for cash returns to recover the outlay, found from a cumulative net cash flow column and given in years and months.
The initial investment divided by the annual net cash inflow, used as the sensible test of a technology investment.
The length of time required for a project's net cash inflows to recover the initial cost of the investment.
Topics that use payback period
- Annex: quantitative skills in business (AQA A-Level)
- Making operational decisions to improve performance: increasing efficiency and productivity (AQA A-Level)
- Component 2: Investment appraisal (Eduqas A-Level)
Related terms
- average rate of return
- break-even output
- analysis
- averages
- axes and scales
- base year
- benchmarking
- break-even charts
Using payback period in the exam
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