Capital Budgeting - Payback Period and Discounted Payback Period

Multiple Choice

What is the decision criteria for Net Present Value (NPV)?

• The higher the NPV is better

• The lower the NPV is better

• NPV more than 1 is better

• NPV is 0 is better

Multiple Choice

What does it mean by capital rationing?

• Liimtation due to unequal life

• Limitation on the dolla size of the capital buget

• Limitation to size disparity

• Limitation due to time disparity

Open Ended

Calculate payback period and discounted payback period for this cash flows with required rate of return of 17%.

Write your workout properly on paper and submit and just key in your answer in the answer box

PBP Long:

DPBP Long:

PBP Short:

DPBP Short: