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not always depends on different factors for eg life of a project but most probably an investment with short payback period gives you a postive npv
True. A short payback period indicates that the investment generates high cash flows in the early part of its economic life, thus resulting to a high present value of cash flows. As a result, there is a greater possibility that NPV will be positive. A short payback period also indicates a high IRR, thus resulting to a greater possibility that the investment's IRR will exceed the cost of capital. And if IRR is greater than the cost of capital, NPV is positive.
Answer is
False
It is possible to have a very short payback period without creating any value. If you loan money to a friend interest-free, you may recoup your loan in, say, a year but considering the time value of money, the NPV would be negative.
I agree with false answer. Thanks for the invitation
The problem is to consider that Payback Period does not taking into consideration the Present Value basically of the inflows into consideration .
To answer this question we should use the MODIFIED payback period. that ascertain to calculate the PV of inflows and Outflows. Thank You
