The payback period in which an expected cash flows are discounted with the help of project cost of capital is classified as __________?
Correct answer: A. discounted payback period
- A. discounted payback period
- B. discounted rate of return
- C. discounted cash flows
- D. discounted project cost
Explanation
The discounted payback period measures how long it takes to recover the initial investment after discounting expected cash flows at the project's cost of capital. Ordinary payback ignores this time value of money.
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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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