When Calculating a Project's Payback Period, Cash Flows Are Discounted

question 42

Multiple Choice

When calculating a project's payback period, cash flows are discounted at:

• A) the opportunity cost of capital.
• B) the internal rate of return.
• C) the risk-free rate of return.
• D)a discount rate of zero.

---

Definitions:

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance.

Cost-volume-profit Analysis

An accounting technique used to determine how changes in costs, sales volume, and price affect a company's profit.

Cost-volume-profit Analysis

An accounting method used to determine how changes in costs and volume affect a company's operating income and net income.

Fixed Costs

Expenses that do not change significantly with the level of business activity, such as rent, salaries, and loan payments.