All else equal,the payback period for a project will decrease whenever the:
A)initial cost increases.
B)required return for a project increases.
C)assigned discount rate decreases.
D)cash inflows are moved earlier in time.
E)duration of a project is lengthened.

Question

Quizplus · Accepted Answer

The payback period is the time required for the cash inflows of a project to equal the initial investment. If cash inflows are moved earlier in time, the payback period will decrease since the point where the initial investment is recouped will be reached sooner. Therefore, option D is the correct choice.

All Else Equal,the Payback Period for a Project Will Decrease