Simple Payback
An investment appraisal method that calculates how long it takes for the cumulative cash inflows from an investment to r...
Formula
Payback Period = Initial Investment ÷ Annual Net Cash Inflow
Real World
Tesla invested $5bn building Gigafactory Nevada; management calculated payback period to assess how quickly battery production revenues would recover that outlay before committing.
Exam Focus
State payback in years and months; show workings — examiners award method marks even if your final answer is wrong.
How well did you know this?