The discounted payback method:
A)considers the time value of money.
B)discounts the cutoff point.
C)discounts the initial cost.
D)is preferred to the NPV method.
E)ignores project risks.

Question

Quizplus · Accepted Answer

The discounted payback method considers the time value of money by discounting the cash flows, unlike the traditional payback method which ignores it. Therefore, it is a better choice than the traditional payback method, but it may still ignore project risks which may affect the investment decision.

The Discounted Payback Method