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Managerial Accounting

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Formula for Computing Payback Period

MGRACT-BL1ZDB

Which of the following formulas BEST reflect a computation tells you the payback period, assuming the cash flows are the same in each year?

A

Initial investment / annual after-tax cash flows

B

annual after-tax cash flows / initial investment

C

present value of annual cash flows / initial investment

D

initial investments / present value of annual cash flows