The Payback Period is a financial metric used to determine the time it takes for an investment to generate enough cash flow to recover its initial cost. It is calculated by dividing the initial investment by the annual cash inflows. This metric helps investors assess the risk associated with an investment, as shorter payback periods are generally preferred. Investors often use the Payback Period to compare different projects or investments. While it provides a quick assessment of liquidity and risk, it does not account for the time value of money or cash flows that occur after the payback period, which are important for a comprehensive financial analysis.