There Are Several Disadvantages to the Payback Period,one of Which

question 37

Multiple Choice

There are several disadvantages to the payback period,one of which is that:

• A) payback ignores the time value of money.
• B) payback emphasizes receiving money back as fast as possible for reinvestment.
• C) payback is easy to use and to understand.
• D) payback can be used in conjunction with time adjusted methods of evaluation.

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Definitions:

Value-based Pricing

Pricing strategy where the price is based on the perceived value of a product or service to the customer rather than the cost of production.

Industrial Grinder

A machine tool used in manufacturing for grinding, which is a process of removing material using abrasion.

Preventive Maintenance

Routine maintenance and servicing of equipment to prevent unexpected breakdowns and failures.

Useful Life

The estimated duration a fixed asset is expected to be economically usable, with normal maintenance, for the purpose it was acquired or constructed.