Which one of these statements related to discounted payback

Which one of these statements related to discounted payback is correct? 19) ______
A) Payback is a better method of analysis than discounted payback.
B) Discounted payback is biased towards long-term projects.
C) Discounted payback does not require a cutoff point.
D) The discounted payback period decreases as the discount rate decreases.
E) Discounted payback is used more frequently in business than payback.

Solution

Correct answer is > D) The discounted payback period decreases as the discount rate decreases.

The discounted payback period will decrease as discount rate decreases because the discounting factor helps to reduce the time period of payback as cash flows is discounted with lesser percentage it will reach its payback early.