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Which one of these statements related to discounted payback is correct? Multiple Choice Discounted payback is biased towards short-term projects. Discounted payback is used more frequently in business than payback. The discounted payback period increases as the discount rate decreases. Discounted payback does not require a cutoff point. Payback is a better method of analysis than discounted payback.

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jepessoa

Answer:

Discounted payback is biased towards short-term projects.

Explanation:

The discounted payback period is a combination of payback period + discounted cash flows.

You must first discount the cash flows using the project's discount rate and once you have the present value of the cash flows, you determine the payback period.

The main disadvantage with this method is that the discounted payback period will always be longer than the regular payback period, so short term projects are favored, while long term projects will be more easily rejected.

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