Without Using Formulas, Provide a Definition of Discounted Payback Period

question 38

Multiple Choice

Without using formulas, provide a definition of discounted payback period.

• A) A project analysis tool that measures the acceptability of a project by determining the length of time required for an investment's discounted cash flows to equal its initial cost.
• B) A project analysis tool that measures the acceptability of a project through the difference between a project's initial investment and whether the present value of its cash flow will
• Repay the investment.
• C) A project analysis tool that measures the acceptability of a project by determining the amount of profit that can be expected based on an investment made.
• D) A project analysis tool that determines the amount of time required for an investment to generate cash flows to recover its initial cost.
• E) A ranking method used to assess projects. PI greater than 1 signify positive NPV projects, while PI less than 1 signify negative NPV projects.

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Definitions:

Standard Costs

Predetermined costs for the manufacturing of products or services, used as target costs or bases for variance analysis.

Actual Costs

The true amounts spent on goods, services, and other charges, as opposed to estimated or budgeted costs.

Volume Variance

A financial metric that measures the difference between budgeted and actual volume of production or sales, impacting costs or revenues.

Fixed Factory Overhead

The portion of total factory overhead costs that remains constant regardless of the level of production or activity in a manufacturing facility.