The discounted payback rule can be best stated as:
A) An investment is acceptable if its discounted payback period is greater than some pre-specified number of years.
B) An investment should be accepted if the discounted payback is positive and rejected if it is negative.
C) An investment should be rejected if the discounted payback is positive and accepted if it is negative.
D) An investment is acceptable if its discounted payback period is less than some pre-specified number of years.

Question

Quizplus · Accepted Answer

The discounted payback rule states that an investment is considered acceptable if the period it takes for the discounted cash flows to pay back the initial investment is less than a pre-specified number of years. This method takes into account the time value of money by discounting the cash flows, unlike the simple payback period method.

The Discounted Payback Rule Can Be Best Stated As