Why Does a Project with Lesser Liquidity Usually Have Greater Payback Period?

1 FINANCE MCQS

Other factors held constant, a project with lesser liquidity is usually due to ____________?

Shorter payback period
Greater payback period
Less project return
Greater project return

Correct Answer: B. Greater payback period

Detailed Explanation

A project with lesser liquidity means the invested funds are tied up for a longer time. This results in a greater payback period, as it takes more time to recover the initial investment.

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Other factors held constant, a project with lesser liquidity is usually due to ____________?

Other factors held constant, a project with lesser liquidity is usually due to ____________?

Detailed Explanation

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In cash flow analysis, two projects are compared using a common life approach, which is classified as…

In capital budgeting, the Internal Rate of Return (IRR) of a project is classified as its ____________?…

In evaluating independent projects, the results of Internal Rate of Return (IRR) and Net Present Value…

In Internal Rate of Return (IRR), the discount rate that makes Net Present Value (NPV) zero is called…