Given the following, which feature identifies the most desirable level of output for a project?
A) Operating cash flow equal to the depreciation expense
B) Payback period equal to the project's life
C) Discounted payback period equal to the project's life
D) Zero IRR
E) Zero operating cash flow

Question

Quizplus · Accepted Answer

The discounted payback period equal to the project's life is the most desirable level of output for a project. This means that the project not only recovers its initial investment within its expected lifespan, but it also generates enough cash flows to cover the cost of capital. This is a good indicator that the project is creating value for the company and is worth pursuing. Options A, B, D, and E do not represent the most desirable level of output.

Given the Following, Which Feature Identifies the Most Desirable Level