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1 FINANCE MCQS

The payback period in which expected cash flows are discounted using the project’s cost of capital is called ____________?

  • Discounted payback period
  • Discounted rate of return
  • Discounted cash flows
  • Discounted cash flows
Correct Answer: A. Discounted payback period

Detailed Explanation

The discounted payback period calculates how long it takes to recover the initial investment when future cash flows are discounted at the project’s cost of capital. Unlike the simple payback period, it accounts for the time value of money, making it a more accurate measure of investment recovery.

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