Accurate Answer The payback period method,(a) Considers time value ofmoney(b) Ignores cash flows after payback(c) Is the best capital budgeting method(d) Considers risk explicitly

The payback period method focuses only on the time it takes for an investment to recover its initial…

Answered: The payback period method, (a)…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 13MC: Which of the following discounts future cash flows to their present value at the expected rate of...

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Which capital budgeting technique defines returns in terms of income instead of cash flows? a) The payback period b) The internal rate of return technique c) The net present value technique d) The unadjusted rate of return method
Financial accounting: the payback period method
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Which of the following is not a method for incorporating risk analysis into capital budgeting? a. Positive/Negative analysis b. Monte Carlo simulations c. Scenario analysis d. Sensitivity analysis e. Decision tree models
Which capital budgeting technique measures all expected future cash inflows and outflows as if they occurred at a single point in time? Group of answer choices a. sensitivity analysis b. accrual accounting rate-of-return method c. net present value method d. payback method
Risk in cash flow estimating for capital budgeting can be defined as: a. the chance that a cash flow will turn out to be worse than the estimate. b. the chance that a cash flow will turn out to be different than the estimate, either better or worse. c. the chance that the cash flows that turn out to be more favorable than the estimate won't totally offset the cash flows that turn out to be worse than the estimate. d. the chance that the NPV and/or IRR will turn out to be worse than the estimate. e. all of the above describe the risk in cash flow estimating.
The capital budgeting method used to find the length of time required for an investment’s discounted cash flows to equal its initial cost is called the Blank______ method. Multiple choice question. accounting rate of return payback period discounted payback period net present value
The capital budgeting method used to find the length of time required for an investment’s discounted cash flows to equal its initial cost is called the Blank______ method. Multiple choice question. payback period discounted payback period accounting rate of return net present value
The discounted payback method discounts cash flows at the opportunity cost of capital and then calculates the payback period. TRUE/FALSE?
Which of the following methods for evaluating capital investment proposals reduces the expected future net cash flows originating from the proposals to their present values and computes a net present value? a. average rate of return b. net present value c. internal rate of return d. cash payback
Methods that ignore the time value of money in capital investment appraisal include which of the following? a. Net present valueb. Discounted payback c. Average rate of return d. All of the above
Which method does not consider the time value of money? Choose the correct. A. Net present value B. Internal Rate of Return C. Average rate of return D. Profitability Index

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The payback period method, (a) Considers time value of money (b) Ignores cash flows after payback (c) Is the best capital budgeting method (d) Considers risk explicitly