What are the project’s payback and discounted payback periods?

11–24. (payback period, net present value, profitability index, and

The payback period is the amount of time it takes for a project’s cumulative cash flow to equal its initial investment. The discounted payback period, on the other hand, uses the time value of money to adjust for future cash flows and measures how quickly a project can generate enough cash flows to cover its initial cost. In general, projects with shorter payback periods tend to be more desirable than those with longer ones because they suggest that it will take less time for an investment to start paying off.