Chapter 26, Problem 11RQ

To determine

Introduction:

Payback Period: Payback period is the period in which the project recovers its initial cost of the investment. It can be calculated by dividing the initial investment by the annual cash inflow from the project. The formula to calculate the Payback period is as follows:

$PaybackPeriod=\frac{InitialInvestment}{AnnualCash\inf low}$

To State: Some criticisms of payback period