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

Question

Quizplus · Accepted Answer

The discounted payback period is the amount of time it takes for a project's discounted cash inflows to equal its initial investment. If the amount of each projected cash inflow is increased, it will lead to a faster accumulation of cash inflows, which will reduce the discounted payback period. Therefore, the best choice is B.

The Discounted Payback Period of a Project Will Decrease Whenever