Discounted payback period differs from simple payback period because it:
Correct answer: C. Accounts for the time value of money
- A. Excludes the initial investment
- B. Uses accounting profit instead of cash flow
- C. Accounts for the time value of money
- D. Includes only cash flows after payback
Explanation
Discounted payback converts future cash inflows into present values before determining when the investment is recovered. Simple payback normally uses undiscounted cash flows.
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