How does depreciation affect the calculation of a project's payback period?

Question

Quizplus · Accepted Answer

Depreciation does not affect the calculation of a project's payback period as it is a non-cash expense. Payback period only takes into consideration the time required for the initial investment to be recovered through the actual cash inflows received from the project, not the book value of the assets involved. Therefore, depreciation is not included in the calculation of a project's payback period.

How Does Depreciation Affect the Calculation of a Project's Payback