Vidyalelo
Commerce · Q474

Financial Management

Graduate and Post Graduate · Commerce · question 474

Q474

Other factors held constant, greater project liquidity is because of

A.
less project return
B.
greater project return
C.
shorter payback period
Answer
D.
greater payback period

Answer: Option C

Solution

Answer: Option C
Solution:
Other factors held constant, greater project liquidity is because of shorter payback period. The payback period is the cost of the investment divided by the annual cash flow. The shorter the payback, the more desirable the investment.