Question

All else equal, the payback period for a project will decrease whenever the_______.

(A) duration of a project is lengthened.
(B) cash inflows are moved earlier in time.
(C) assigned discount rate decreases.
(D) required return for a project increases.
(E) initial cost increases.

Answer 1

Answer:

(B) cash inflows are moved earlier in time.

Explanation:

The payback period stated time-frame during which the initial amount of investment should be recovered. It is expressed in the year form

The formula to compute the payback period is shown below:

Payback period = Initial investment ÷ Net cash flow

where,  

The net cash flow = annual net operating income + depreciation expenses

The payback period of the project decreases when the accumulated starting year cash flows increases that results the movement of the cash inflows earlier in time

Answer 2

Answer:

B

Explanation:

because the project is increases