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In capital budgeting analyses, the primary difference between the traditional payback period (PB) technique and the discounted payback period (DPB) technique is that the DPB:

In capital budgeting analyses, the primary difference between the traditional payback period (PB) technique and the discounted payback period (DPB) technique is that the DPB:

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considers the time value of money.

ensures the amount of the original investment is recovered more quickly from the project's cash flows.

ensures a shorter payback period for a project, because projects with longer payback periods generally are accepted using the DPB technique.

is always shorter than the traditional payback period.

considers cash flows that occur after the discounted payback period.

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