Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

10. Time Value of Money

Time Value of Money Equations

Financial Accounting

10. Time Value of Money

Time Value of Money Equations

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Multiple Choice

The expected amount of time to recover the initial amount of an investment is called the:

Payback period

Internal rate of return

Net present value

Future value

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Verified step by step guidance

Understand the concept of the payback period: It is the amount of time required to recover the initial investment from the cash inflows generated by the investment.

Compare the payback period to other financial metrics: The internal rate of return (IRR) measures the profitability of an investment, net present value (NPV) calculates the value of cash flows in today's terms, and future value (FV) projects the value of an investment at a future date.

Identify the key characteristic of the payback period: It focuses solely on the time required to recover the initial investment, without considering the time value of money or profitability beyond the recovery period.

Recognize that the payback period is often used for quick assessments of investment risk, especially when liquidity is a concern or when comparing multiple projects.

Conclude that the correct answer to the question is 'Payback period,' as it directly refers to the expected amount of time to recover the initial investment.