Disadvantage of the payback method include: Answer choices are below: A) does not consider cash flows past payback period. B) the most common version does not account for time value of money. C) has a bias against long-term projects such as research and development and new product launches. D) all of the above.

Disadvantage of the payback method include: Answer choices are below: A) does not consider cash flows past payback period. B) the most common version does not account for time value of money. C) has a bias against long-term projects such as research and development and new product launches. D) all of the above.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 20E

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Similar questions

Which of the following is a disadvantage of the IRR project evaluation method? Select one: a. It does not take into account the time value of money. b. If there are negative cash flows after positive cash flows, there may be zero or multiple internal rates of return. c. It does not make adequate allowance for risk. d. It focuses on accounting profit rather than cash flow as the source of value.
Which of the following are significant flaws with the Payback Period Method? (Select all that apply) A. Biased against long-term projects B. Uses an arbitrary benchmark C. Very rarely used in practice D. Uses accounting profits rather than cash flows E. Ignores Time Value of Money
Which are problems of the payback criterion? Check all that apply: It ignores cash flows after the cutoff date. It ignores the time value of money. It doesn't show the value created by a project. It doesn't fully reflect the risk of a project. It uses an arbitrary cutoff value. It is difficult to calculate.
Which of the following is a disadvantage of the IRR project evaluation method? Question 5Select one: a. It does not take into account the time value of money. b. If there are negative cash flows after positive cash flows, there may be zero or multiple internal rates of return. c. It does not make adequate allowance for risk. d. It focuses on accounting profit rather than cash flow as the source of value.
A major problem with the discounted payback period is that Blank______. Multiple choice question. the time value of money is ignored the cash flows beyond the cutoff date are ignored cost of implementation is ignored opportunity costs are ignored
A major problem with the discounted payback period is that Blank______. Multiple choice question. the cash flows beyond the cutoff date are ignored cost of implementation is ignored opportunity costs are ignored the time value of money is ignored
Which of the following are disadvantages of the average accounting return (AAR)? More than one answer may be correct. Multiple select question. It ignores the time value of money. It uses an arbitrary benchmark cutoff rate. Its input data is not easily available. It is based on cash flows and market value.
Which of the following statements is correct regarding the payback method? Takes account of differences in size among projects. If a project’s payback is positive, then the project should be accepted because it must have a zero NPV. Ignores cash flows beyond the payback period. Has an objective, market-determined benchmark for making decisions. Directly account for the time value of money.
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Which of the following is NOT a limitation of the payback rule? O It does not consider cash flows occurring after the payback period. O Lacks a decision criterion that is economically based. O It does not consider the time value of money. O It is difficult to calculate.
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Which of the following is a disadvantage of the internal rate of return (IRR) rule? Multiple choice question. It always leads to a decision that conflicts with the decision of the NPV method. It results in multiple answers for conventional cash flows. It may lead to incorrect decisions when comparing mutually exclusive investments. It needs more input data than the NPV method.