Question $4$ of $16$

ABC Corp. is considering buying a new machine to produce wheel covers faster. How would you best define the payback period for this machine?

Select an answer:

the number of years it will take ABC to recover its original investment, based on net annual cash flows received from the investment

the number of sales it will take ABC to pay back the loan that it took out to finance the purchase of the new machine

the number of years it will take ABC to recover its original investment, based on average new sales per year

the number of sales per year it will take ABC to pay for the machine, based on discounting future cash flows to present value