The discounted payback technique will never accept a negative-NPV project.

Question

Quizplus · Accepted Answer

The discounted payback technique takes into account the time value of money and calculates the time required for the investment to generate enough cash flows to recover the initial investment and reach the breakeven point. If the project's NPV is negative, it means that the cash inflows from the project cannot even recover the initial investment, let alone generate profits. Therefore, the discounted payback technique will reject any project with a negative NPV, as it is not expected to recover the investment in the discounted payback period.

The Discounted Payback Technique Will Never Accept a Negative-NPV Project