A Project Has a Payback Period of Five Years and the Firm

question 41

Multiple Choice

A project has a payback period of five years and the firm employs a 10 percent cost of capital.Which of the following statements is correct concerning this Project's discounted payback?

• A)Discounted payback will exceed five years
• B)Discounted payback will be less than five years
• C)Discounted payback will decrease if the Project's IRR exceeds 10 percent
• D)Discounted payback will increase if the Project's IRR is less than 10 percent

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Definitions:

Natural Resource

Materials or substances such as minerals, forests, water, and fertile land that occur in nature and can be used for economic gain.