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Investment Appraisal
Quick questions on Payback period explained: H2 Principles of Accounting
5short Q&A pairs drawn directly from our worked dot-point answer. For full context and worked exam questions, read the parent dot-point page.
What are even cash flows?Show answer
When inflows are equal each year, payback is a simple division:
What are uneven cash flows?Show answer
When inflows vary, accumulate them year by year until the outlay is recovered, then interpolate within the final year:
What is q1?Show answer
A project costs \90\,000\ a year. Find the payback period. [2 marks]
What is q2?Show answer
Inflows are \40\,000\, \60\,000\. Find the payback period. [3 marks]
What is q3?Show answer
State one strength and one weakness of the payback method. [2 marks]
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