Discussion
An investment of \( 30 \) million returns a net cash inflow of \( 6.5 \) million a year. The simple payback period is
Answer: C
Correct answer: 4.6 years
\[ \text{Payback} = \frac{30}{6.5} = 4.6\ \text{years} \]Simple payback ignores what happens after that point and the time value of money, so it is a screening measure rather than a decision rule.
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