Under the payback method of analysis:
A) The initial cash outlay is ignored.
B) The cash ﬂow in year 3 is ignored if the required payback period is 4 years.
C) A project's initial cost is discounted.
D) The cash ﬂow in year 2 is valued just as highly as the cash ﬂow in year 1 as long as the required payback period is 3 years or more.
E) A project will be acceptable whenever the payback period exceeds the pre-speciﬁed number of years.

Question

Quizplus · Accepted Answer

The payback method values cash flows equally within the payback period, without discounting, as long as they occur within the required timeframe.

Under the Payback Method of Analysis