Which of the following is true for 5-year project with a 3-year payback period?
A)The net present value is negative.
B)The net present value is zero.
C)The net present value is positive.
D)Not enough information to determine anything about the project's net present value.

Question

Quizplus · Accepted Answer

The payback period only tells us how long it takes for a project to recoup its initial investment, not the value it generates over its entire lifespan or its net present value (NPV). Therefore, without additional information on cash flows beyond the payback period or the discount rate used, we cannot determine the NPV.

Which of the Following Is True for 5-Year Project with a 3-Year