Using the Discounted Payback Method,a Project Should Be Accepted When

question 15

True/False

Using the discounted payback method,a project should be accepted when the discounted payback is greater than the project's expected life.

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Definitions:

Discount Rate

The interest rate used to discount future cash flows to their present values, often used in investment appraisal and risk assessment.

Duration

The measure of the sensitivity of the price of a bond or other debt instrument to changes in interest rates, often expressed in years.

Coupon Bond

A type of bond that pays the holder interest payments at fixed intervals (usually annually or semi-annually) until the bond matures, at which point the principal amount is repaid.

Interest-Rate Risk

The potential for investment losses that result from a change in interest rates, affecting the value of fixed-income securities inversely.