What is the discounted payback period of a project whose profitability index is higher than 1?

Question

Quizplus · Accepted Answer

The discounted payback period of a project whose profitability index is higher than 1 is lower than the project lifetime as it means that the project's present value of future cash inflows is higher than the initial investment. Therefore, the project's cash inflows will cover the invested cost in a shorter time period. Option A and B are incorrect as they do not reflect the relationship between profitability index and discounted payback period. Option D is also incorrect as it suggests that the project will never recover its initial investment, which is unlikely if the profitability index is higher than 1.

What Is the Discounted Payback Period of a Project Whose