Discounted payback periods for projects Y and Z are
A) 1.64 and 1.71 years.
B) 3.14 years and never
C) 2 years and 2 years
D) 5 years and never

Question

Quizplus · Accepted Answer

The discounted payback period is the time it takes for the net present value of the cash flows to equal the initial investment. If a project's cash flows don't cover the initial investment even after discounting, the payback period is considered to be "never." Option B suggests that Project Y has a payback period, indicating its cash flows eventually cover the initial investment, while Project Z does not, implying its cash flows, even when discounted, never cover the initial investment.

Discounted Payback Periods for Projects Y and Z Are