If Cash Flows Are Uneven, the Payback Period Assumes That

question 102

True/False

If cash flows are uneven, the payback period assumes that the inflows during the last fraction of a year occur evenly.

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Definitions:

Mutually Exclusive

Decisions or events that cannot occur at the same time, implying that the selection of one precludes the selection of another.

Pay Back

The time period required for an investment to generate cash flow sufficient to recover its initial cost.

Cash Flows

The total amount of money being transferred into and out of a business, especially considered as affecting liquidity.

Shareholder Wealth

The total value of shares held by investors in a company, often used as a measure of company’s financial health and management performance.