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If the payback period equals the projects life, the IRR will be equal to zero True...

If the payback period equals the projects life, the IRR will be equal to zero

True or False

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Answer #1

Answer :- True.

Explanation :- Payback period is the length of time required to recover the intial cost of investment project. Payback method is applicable in case of evaluating risky investment project involving huge / large initial investment. When the payback period of project and the life of project are equal then it indicates that initial investment cost incurred on the project is recovered fully, thereby, producing zero internal rate of return (IRR) only in the finance. Accordingly, The statement given in question is very correct i.e., true one.

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