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An investment of \( 30 \) million returns a net cash inflow of \( 6.5 \) million a year. The simple payback period is

  • A.5.5 years
  • B.3.5 years
  • C.4.6 years
  • D.0.22 years

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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