The discounted payback period of a project will decrease whenever the:
A)initial cash outlay of the project is increased.
B)discount rate applied to the project is increased.
C)amount of each projected cash inflow is increased.
D)time period of the project is increased.
E)costs of the fixed assets utilized in the project increase.

Question

Quizplus · Accepted Answer

The discounted payback period measures the length of time required for the project to pay back its initial investment, taking into account the time-value of money. The discounted payback period will decrease when the amount of each projected cash inflow is increased, as this increases the amount of cash available to pay back the initial investment, leading to a shorter payback period. The initial cash outlay, discount rate, time period, and fixed asset costs do not directly affect the discounted payback period.

The Discounted Payback Period of a Project Will Decrease Whenever