Question

Your project has expected cash inflows of $1.2 million in year 1, $2.4 million in year 2, and $4.6 million in year 3. The project pays for itself in 23 months. Which cash flow technique was used to determine this?
A) Discounted cash flow
B) IRR
C) NPV
D) Cost benfit analysis

Answer 1

Answer:

A) Discounted cash flow

Explanation:

The IRR gives a rate as an answer, which represent the yield of the project.

The NPV gives a valuation in dollars, same for the cost benefit analysis.

Only the payback discounted cash flow gives the answer at which point the project pays itself. Which is an answer in years or month.