A Project's payback period is determined to be four years.If it is later discovered that additional cash flows will be generated in years five and six, then:
A)The Project's payback period will be reduced
B)The Project's payback period will be increased
C)The Project's payback period will be unchanged
D)The discount rate must be known to determine whether the payback period changes

Question

Quizplus · Accepted Answer

The payback period only considers the time it takes to recover the initial investment, so additional cash flows after the payback period do not affect it.

A Project's Payback Period Is Determined to Be Four Years