Given two mutually exclusive projects and a zero required rate of return,the payback period and NPV method of selecting investments will always lead to the same decision on which project to undertake.

Question

Quizplus · Accepted Answer

The payback period method focuses on how quickly the initial investment can be recovered, not considering the time value of money or cash flows beyond the payback period. In contrast, the NPV method considers all cash flows and the time value of money, potentially leading to different decisions.

Given Two Mutually Exclusive Projects and a Zero Required Rate