A project's payback period is determined to be 4 years.If it is later discovered that additional cash flows will be generated in years 5 and 6,then the project's payback period will:
A) be reduced.
B) be increased.
C) be unchanged.
D) change but the discount rate must be known to determine the nature of the change.

Question

Quizplus · Accepted Answer

The payback period only considers the time it takes to recover the initial investment, so additional cash flows after the payback period do not affect it.

A Project's Payback Period Is Determined to Be 4 Years