If a payback period for a project is greater than its expected useful life, the
A) project will always be profitable.
B) entire initial investment will not be recovered.
C) project would only be acceptable if the company's cost of capital was low.
D) project's return will always exceed the company's cost of capital.

Question

Quizplus · Accepted Answer

If the payback period for a project is greater than its expected useful life, it means that the project will not fully recover the initial investment before the end of its useful life. Therefore, the entire initial investment will not be recovered. This is not ideal as it means the project may not be profitable and may not be worth pursuing.

If a Payback Period for a Project Is Greater Than