If you were evaluating two mutually exclusive projects for a firm with a zero cost of capital, the payback method and NPV method would always lead to the same decision on which project to undertake.

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The payback method focuses on how quickly investment costs can be recovered, not on the total value created, while the NPV method evaluates the total value a project adds over its lifetime, taking into account the time value of money. Even with a zero cost of capital, these methods can lead to different decisions because they measure different aspects of a project's financial attractiveness.

If You Were Evaluating Two Mutually Exclusive Projects for a Firm