Which of the Following Statements Is Correct

question 18

Multiple Choice

Which of the following statements is correct?

• A) A weakness of both payback and discounted payback is that neither accounts for cash flows received after the payback.
• B) Discounted payback uses a more aggressive reinvestment rate assumption than payback.
• C) Neither payback nor discounted payback uses time value of money concepts.
• D) None of the statements are correct.

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Definitions:

Fair Value

The price at which an asset or liability could be exchanged between knowledgeable, willing parties in an arm's length transaction.

Spot Rates

The existing selling or buying price of a certain asset that is ready for instant delivery.

IFRS 9

International Financial Reporting Standard 9, dictating the accounting for financial instruments, including recognition, measurement, and impairment of assets.

Accounts Receivable

Money owed to a business by its clients or customers for goods or services delivered or used but not yet paid for.