The Payback Method

question 45

Multiple Choice

The payback method:

• A)is a complex method of analysis.
• B)is infrequently used.
• C)incorporates the time value of money.
• D)ignores benefits and costs that occur after the project has paid for itself.

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Definitions:

Representativeness Heuristic

Estimating the likelihood of events in terms of how well they seem to represent, or match, particular prototypes; may lead us to ignore other relevant information.

Availability Heuristic

Estimating the likelihood of events based on their availability in memory; if instances come readily to mind (perhaps because of their vividness), we presume such events are common.

Insight

A sudden realization of a problem’s solution; contrasts with strategy-based solutions.

Engineering Problem

A challenge or issue within the field of engineering that requires a solution, often involving mathematical, scientific, and practical knowledge.