The discounted payback method
A)discounts a project's initial cost.
B)is simpler and more reliable than the payback period.
C)is as reliable as NPV because both methods use discounted cash flo.
D)uses an arbitrary cutoff period.
E)ignores a project's initial costs.

Question

Quizplus · Accepted Answer

The discounted payback method uses an arbitrary cutoff period, which may not necessarily reflect the project's true value. Therefore, it is not as reliable as methods that consider the project's entire cash flow, such as net present value (NPV).

The Discounted Payback Method