When Calculating a Project's Payback Period,cash Flows Are

question 47

Multiple Choice

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

• A) discounted at the opportunity cost of capital.
• B) discounted at the internal rate of return.
• C) discounted at the risk-free rate of return.
• D) not discounted at all.

---

Definitions:

Break-even Point

The point at which total cost and total revenue are equal, meaning no net loss or gain, and one has "broken even".

Mixed Cost

A type of cost that contains both fixed and variable components and changes in total with the level of activity.

Rental Cost

The expense incurred for using a property, equipment, or other asset under a lease agreement for a specified period.

Machine Hour

A unit of measure representing the operation of a machine for one hour, often used in cost accounting to allocate expenses based on machine use.