If a Project Has a Payback Period of 5 Years

question 23

Multiple Choice

If a project has a payback period of 5 years and a cost of capital of 10%,then the discounted payback will:

• A) exceed 5 years.
• B) be less than 5 years.
• C) decrease if the cost of capital increases.
• D) decrease if the payback period increases due to revised cash flows.

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Definitions:

Taxed

The imposition of financial charges or other levies on individuals or entities by governments to fund public spending and services.

Elderly Person

An individual who is significantly advanced in age, typically considered to be aged 65 years or older.

Implicit Marginal Tax Rates

The rate at which additional income is taxed, considering both explicit tax rates and the effect of phase-outs of tax benefits or welfare benefits.

Income Assistance

Financial support provided by governmental or non-profit organizations to individuals with insufficient income to meet their basic needs.