Which of the following is an advantage of using the payback period method for project selection? The payback period method considers the time value of money The payback period method considers accounting income The payback period method shows when funds will be available for reinvestment The payback period method ignores the time value of money

Which of the following is an advantage of using the payback period method for project selection? The payback period method considers the time value of money The payback period method considers accounting income The payback period method shows when funds will be available for reinvestment The payback period method ignores the time value of money

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The cash payback technique: a. considers cash flows over the life of a project. b. may be useful as an initial screening device. c. is superior to the net present value method. d. cannot be used with uneven cash flows.
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What is the Modified Internal Rate of Return (MIRR) Select one: The opposite of NPV A reinvestment rate to account for positive cash flows reinvested into a project An approach to discounting The finance rate of a project
What type of projects does the Payback method favor?
Why is payback often used as the sole method of analyzing a proposed small project? Payback is the most desirable of the various financial methods of analysis. The benefits of payback analysis usually outweigh the costs of the analysis. Payback considers the time value of money. All relevant cash flows are included in the payback analysis. Payback is focused on the long-term impact of a project. OOOO
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Questions and Topics for Discussion: 1. Define capital expenditures and provide examples of capital expenditures. 2. Cash flows for a particular project should be measured on an incremental basis. What does that mean? 3. How does the opportunity cost concept affect capital budgeting cash flow determination?
Which of the following statements is true regarding the payback period? Multiple Choice It measures the length of time that it takes for a project to recover its initial cost from the discounted net cash inflows that it genera It measures the length of time that it takes for a project to recover its initial cost from the net cash inflows that it generates. It measures the length of time that it takes for a project to recover its initial cost from the incremental net operating income that It measures the length of time that it takes for a project to recover its initial cost from the discounted incremental net operating it generates.
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