📢 Too many exams? Don’t know which one suits you best? Book Your Free Expert 👉 call Now!


    Question

    If two mutually exclusive investment projects have

    identical payback periods but generate different total cash inflows over their respective lifespans, how will the traditional Payback Period method evaluate them?
    A It will favour the project with higher total cash inflows over its life. Correct Answer Incorrect Answer
    B will be indifferent between the two projects Correct Answer Incorrect Answer
    C It will favour the project with higher initial investment Correct Answer Incorrect Answer
    D It will switch to the discounted payback method for decision-making. Correct Answer Incorrect Answer

    Solution

    The correct answer is B

    Practice Next
    ask-question