Which of the Following Statements Is FALSE

question 78

Multiple Choice

Which of the following statements is FALSE?

• A)The payback rule is useful in cases where the cost of making an incorrect decision might not be large enough to justify the time required for calculating the NPV.
• B)The payback rule is reliable because it considers the time value of money and depends on the cost of capital.
• C)For most investment opportunities,expenses occur initially and cash is received later.
• D)Over fifty percent of firms surveyed reported using the payback rule for making decisions.

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Definitions:

Tax Rate

The specific ratio of income that must be given to the government as tax by both people and companies.

Budgeting Process

A systematic approach where businesses estimate their future income, expenditures, and capital needs to achieve their financial goals.

Selling Price

The amount of money for which a product is sold to the customer, not necessarily reflecting its cost or intrinsic value.

Department Spend

Relates to the total amount of money allocated and spent by a specific department within an organization.