Financial accounting: the payback period method The payback period method_a) Considers time value of moneyb) Ignores cash flows after paybackc) Is the best capital budgeting methodd) Considers risk explicitly

Explanation of Payback Period Method: The payback period method calculates the time required to…

Answered: The payback period method_ a) Considers…

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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When using the NPV method for a particular investment decision, if the present value of all cash Inflows Is greater than the present value of all cash outflows, then _______ . A. the discount rate used was too high B. the investment provides an actual rate of return greater than the discount rate C. the investment provides an actual rate of return equal to the discount rate D. the discount rate is too low
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
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Which of the following methods of capital budgeting tries to equate the present value of cash inflows to present value of cash outflows? a. Net present value b. Payback period c. Internal rate of return d. Accounting Rate of return
Finding the present value of future cash flows is called and finding the future value of present cash flows is called O A. analytics, tracking B. capital budgeting, short-term budgeting C. discounting, compounding D. financial ratio analysis, financial statement analysis O E. fundamental analysis, technical analysis
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
Suppose an investment has conventional cash flows with positive NPv. How would it impact your decision based on capital budgeting techniques mentioned below? i. Profitability index (PI) ii. Internal Rate of Return (IRR) iii. Payback Period (PBP)
What is the most commonly used capital budgeting procedures? Select one: a. IRR b. Payback period c. Discounted Payback period d. NPV e. Profitability Index
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
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
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 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

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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