Question

The discounted payback period for a project will be _______ the payback period for the project given a positive, non-zero discount rate. The answer cannot be determined based on the information provided. longer than shorter than equal to

Answer 1

Answer: longer than

Explanation:

The discounted payback period simply refers to the number of years that will be required for the cumulative discounted cash inflows to be able to cover a project's initial investment.

It should be noted that the discounted payback period for a project will be longer than the payback period for the project given a positive, non-zero discount rate. This is because the time value of money will be taken into consideration, hence, this will bring about a longer time.