The discounted payback period of a project will decrease whenever the:
A) Discount rate applied to the project is increased.
B) Initial cash outlay of the project is increased.
C) Time period of the project is increased.
D) Amount of each project cash flow is increased.
E) Costs of the fixed assets utilized in the project increase.

Question

Quizplus · Accepted Answer

The discounted payback period decreases when the amount of each project cash flow is increased because larger cash inflows allow the initial investment to be recovered more quickly when discounted back to present value terms.

The Discounted Payback Period of a Project Will Decrease Whenever