The discounted payback period of a project will decrease whenever the:
A)discount rate applied to the project is increased.
B)initial cash outlay of the project is increased.
C)time period of the project is increased.
D)amount of each project cash inflow is increased.
E)costs of the fixed assets utilized in the project increase.

Question

Quizplus · Accepted Answer

The discounted payback period measures the amount of time it takes for the discounted cash inflows of a project to equal the initial investment. If each project cash inflow is increased, this will lead to a shorter discounted payback period because the cash inflows are accumulating more quickly. None of the other choices have a direct impact on the discounted payback period.

The Discounted Payback Period of a Project Will Decrease Whenever