you were evaluating two mutually exclusive projects for a firm with a zero cost of capital, the payback method and NPV method would always lead to the same decision on which project to undertake.

Question

Quizplus · Accepted Answer

The payback method and NPV method can lead to different decisions because the payback method ignores the time value of money and cash flows beyond the payback period, while NPV considers all cash flows and discounts them to present value.

You Were Evaluating Two Mutually Exclusive Projects for a Firm