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Payback Period MCQs for Competitive Exams

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Payback Period MCQs for Competitive Exams

Practice with answers, explanations, and exam-focused revision notes.

22 MCQs Page 1

Topic Notes: Payback Period

These notes summarize the key preparation context before you attempt the MCQs. Review the topic focus, then practice the questions below with answers and explanations.

Quick Overview

Payback Period MCQs in Finance are useful for candidates who need targeted practice for CSS, PMS, FPSC, PPSC, NTS, entry tests, and other competitive exams in Pakistan. This topic page is designed for quick revision, repeated practice, and exam-focused preparation.

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1
Calculate the payback period for a project where the initial uncovered cost at the start of the recovery year is $300, the total cash flow during that year is $650, and the project took 4 full years to reach the recovery phase.
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2
Which financial metric is calculated by adding the number of years required for full recovery to the ratio of the remaining uncovered cost at the start of the recovery year to the cash flow generated during that same year?
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3
Calculate the payback period for an investment with a net initial cost of $6,850,000 and uniform annual cash inflows of $2,050,000.
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4
What metric is calculated by dividing the net initial investment by the uniform annual increase in future cash flows?
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5
Which capital budgeting technique determines the duration required to recover the initial project investment through expected cash inflows?
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6
Calculate the payback period given an uncovered cost of $300 at the start of the year, a total cash flow of $650 during the recovery year, and 4 years elapsed prior to full recovery.
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7
Calculate the payback period given: 3 years have passed before full recovery, $200 is the uncovered cost at the start of the recovery year, and $400 is the total cash flow during that recovery year.
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8
Calculate the payback period given an initial uncovered cost of $200 at the start of the year, a total cash flow of $400 during the recovery year, and 3 years elapsed prior to full recovery.
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9
If a project has a payback period of 4 years and generates uniform annual cash flows of $2,750,000, what is the initial investment?
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10
Which capital budgeting technique is evaluated based on the principle that a shorter duration is preferable?
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