The correct answer is A. discounted payback period.
The discounted payback period is a method of investment analysis that takes into account the time value of money. It is calculated by finding the number of years it takes for the cumulative discounted cash flows from an investment to equal the initial investment.
The discounted payback period is a useful tool for comparing investments with different cash flow patterns. It is also useful for investors who are concerned with the time it takes to recoup their initial investment.
However, the discounted payback period has some limitations. It does not take into account the total amount of cash flows generated by an investment, only the time it takes to recoup the initial investment. Additionally, it does not consider the risk of an investment.
The other options are incorrect because:
- B. discounted rate of return is a method of investment analysis that takes into account the time value of money and the risk of an investment. It is calculated by finding the rate of return that would make the present value of the future cash flows from an investment equal to the initial investment.
- C. discounted cash flows are the cash flows from an investment that have been discounted to reflect the time value of money.
- D. discounted project cost is the initial investment in an investment, plus the present value of the future cash flows from the investment.