Question

Which financial metric indicates the time required for cumulative cash inflows to recover the initial investment in a mining project?

• A. Internal Rate of Return (IRR)
• B. Discounted Payback Period (DPP)
• C. Net Present Value (NPV)
• D. Profitability Index (PI)

Hint:

Remember the distinction: \[ \boxed{ \text{Payback Period} \rightarrow \text{Ignores discounting} } \] \[ \boxed{ \text{Discounted Payback Period} \rightarrow \text{Considers the time value of money.} } \]

Answer 1

The Correct Option is B

Step 1: Recall the meaning of Discounted Payback Period. The Discounted Payback Period (DPP) measures the time required for the discounted cumulative cash inflows to recover the initial investment.

Step 2: Identify the correct metric. Unlike the simple payback period, DPP considers the time value of money. Hence, \[ \boxed{\text{Discounted Payback Period (DPP)}} \] is the correct answer. Therefore, \[ \boxed{(B)} \] is the correct answer.