In calculation of a payback period, what use is made of cash flows occurring after the end of the payback period?
A) They are ignored.
B) They are discounted back to time zero.
C) They are included in the accept/reject decision.
D) They are normally canceled by initial negative cash flows.

Question

Quizplus · Accepted Answer

The payback period only considers the time it takes to recover the initial investment, and therefore ignores any cash flows occurring after the payback period.

In Calculation of a Payback Period, What Use Is Made