If an asset costs $16,000, has an expected useful life of 8 years, is expected to have a $2,000 salvage value and generates net annual cash inflows of $2,000 a year, the cash payback period is:. A) 8 years.
B) 7 years.
C) 6 years.
D)5 years.

A) 8 years

Explanation: For every business, the shorter the payback period, the more attractive the investments and the longer the payback period the less attractive such investment is.

Payback period is the time in which the initial cost  of an investment is able to be recouped  through inflow of  cash generated by such investment.

It is calculated as   cost of the initial investment divided by the annual cash flow. ie

Cash Payback Period= Initial Investment/ Annual Cash flow

= 16,000/ 2000

= 8 years

by knowing conditionality

explanation: