A Project Has a Payback Period of 5 Years and the Firm

question 69

Multiple Choice

A project has a payback period of 5 years and the firm employs a 10% cost of capital.Which of the following statements is correct concerning this project's discounted payback?

• A) Discounted payback will exceed 5 years.
• B) Discounted payback will be less than 5 years.
• C) Discounted payback will decrease if the project's IRR exceeds 10%.
• D) Discounted payback will increase if the project's IRR is less than 10%.

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Definitions:

Causes

Causes refer to factors or events that bring about a particular outcome or effect, often used in exploring reasons behind occurrences in natural, social, and scientific contexts.

Effects

The outcomes or consequences resulting from a particular action or condition.

Shell Model

Model of electron distribution in an atom.

Nitrogen Atom

A chemical element with symbol N and atomic number 7, constituting a key part of living organisms' molecules, such as DNA and proteins.