When the discounted payback period (DPB) technique is used to evaluate a capital budgeting project, it should be accepted when its DPB is greater than the project's expected life.

Question

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The discounted payback period (DPB) technique evaluates a project by calculating the time it takes for the project's discounted cash flows to equal the initial investment. Therefore, the project should be accepted only if the DPB is less than or equal to the project's expected life, not greater than.

When the Discounted Payback Period (DPB) Technique Is Used to Evaluate