Other factors held constant, the greater project liquidity is because of ___________?
Correct answer: C. shorter payback period
- A. less project return
- B. greater project return
- C. shorter payback period
- D. greater payback period
Explanation
A shorter payback period means the investment is recovered sooner, increasing project liquidity and reducing the time funds remain tied up. A longer payback period has the opposite effect.
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About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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