Use the following information to answer the following question.
Below are the expected after-tax cash flows for Projects Y and Z.Both projects have an initial cash outlay of $20,000 and a required rate of return of 17%.
Project Y Project Z

-Discounted payback periods for projects Y and Z are
A)1.64 and 1.71 years.
B)3.14 years and never
C)Two years and two years
D)Five years and never

Question

Use the following information to answer the following question.
Below are the expected after-tax cash flows for Projects Y and Z.Both projects have an initial cash outlay of $20,000 and a required rate of return of 17%.
Project Y Project Z
 
-Discounted payback periods for projects Y and Z are
A)1.64 and 1.71 years. 
B)3.14 years and never 
C)Two years and two years 
D)Five years and never

Quizplus · Accepted Answer

The discounted payback period is the time it takes for the discounted cash flows of a project to equal the initial investment. If a project's cash flows never exceed the initial investment when discounted, it means the project's payback period is "never." Choice B indicates a scenario where one project has a specific payback period, and the other project's cash flows are insufficient to recover the initial investment, even when discounted, which is a possible outcome in capital budgeting analysis.

Use the Following Information to Answer the Following Question