Which of the following is true about using discounted payback analysis for projects which have only positive cash flows after the initial outlay and for which the discount rate is positive?
A) Discounted payback is better than simple payback because in simple payback analysis the cutoff payback period is arbitrarily set by management
B) Any project that fails to pay back at all on a discounted basis must have a positive NPV
C) When comparing two projects, the one with shorter payback period on a discounted basis will have a larger NPV
D) Discounted payback is much simpler to calculate than regular payback
E) The discounted payback period will be longer than the regular payback period

Question

Quizplus · Accepted Answer

The discounted payback period accounts for the time value of money, making it longer than the regular payback period, which does not discount future cash flows.

Which of the Following Is True About Using Discounted Payback