A project that just breaks even on an accounting basis has a discounted payback period equal to its life.

Question

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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 just breaks even on an accounting basis, it does not account for the time value of money, which is considered in the discounted payback period calculation. Therefore, the two measures can yield different results.

A Project That Just Breaks Even on an Accounting Basis