If a project's present value payback period equals the length of the project, then ____.

Question

Quizplus · Accepted Answer

If the present value payback period equals the length of the project, it means that the project's cash inflows will fully recover the initial investment at the end of the project. This implies that the project's NPV is zero, which is calculated as the sum of the present value of cash inflows minus the present value of cash outflows. Option A is incorrect because a positive NPV indicates that the project is profitable, while option C is incorrect because a PI less than 1.0 implies that the project's benefits do not exceed the costs. Option D is redundant as it is already stated in the question stem.

If a Project's Present Value Payback Period Equals the Length