In capital budgeting analyses, the primary difference between the traditional payback period (PB) technique and the discounted payback period (DPB) technique is that the DPB:

Question

Quizplus · Accepted Answer

The discounted payback period (DPB) technique considers the time value of money, whereas the traditional payback period (PB) technique does not. This means that the DPB takes into account the fact that future cash flows are worth less than current cash flows due to factors such as inflation and the opportunity cost of tying up funds. The DPB therefore calculates the time it takes to recover the discounted initial investment, whereas the PB only looks at the time it takes to recover the initial investment.

In Capital Budgeting Analyses, the Primary Difference Between the Traditional