Everything else equal, a project that has a long traditional payback period (PB) _____.

Question

Quizplus · Accepted Answer

A longer traditional payback period means that the project's cash flows will take longer to recoup the initial investment, which implies greater risk due to uncertainty in the future cash flows. Other factors such as liquidity, NPV, expected rate of return, and terminal value may not necessarily be affected by the payback period alone.

Everything Else Equal, a Project That Has a Long Traditional