The discounted payback period method factors time value of money concepts into the calculation.

Question

Quizplus · Accepted Answer

The discounted payback period method adjusts for the time value of money by discounting future cash flows back to their present value. This helps factor in the opportunity cost of tying up funds in a project and helps determine the point in time when enough cash flows have been generated to cover the initial investment and earn a return.

The Discounted Payback Period Method Factors Time Value of Money