A project has a service life of five years with the initial investment outlay of $200,000....
A project has a service life of five years with the initial investment outlay of $200,000. If the discounted payback period occurs at the end of the project service life (say five years) at an interest rate of 10%, which of the following statements is true?
A-The discounted payback period occurs at the end of project service life.
B-The NPV of the project may equal or be greater than 0.
C-We should invest in the project
D-All of the above.
Homework Answers
If payback is five year Then present worth of future cash flow is equal to 200000 or greater than 200000 so NPW is 0 or positive
We can invest in this project as NPW is not negative
NPW = 0 in worst case scenario
So correct option is D. ALL of the above
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