The Discounted Payback Period Is Longer Than the Simple Payback

question 15

Multiple Choice

The discounted payback period is longer than the simple payback period because:

• A) the future cash flows are worth less.
• B) the cut-off dates are different.
• C) the cash outflows are worth more.
• D) the PV of cash inflows are worth more.

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Definitions:

Rational Model

A decision-making framework based on objective analysis, logical reasoning, and clear, structured steps to arrive at a decision.

Best Possible Alternative

A decision-making strategy that aims to identify the most optimal choice available among various options.

Probability of Success

The likelihood or chance that a particular action, endeavor, or initiative will achieve its intended outcome.

Decision-Making Process

The cognitive process leading to the selection of a course of action among variations.