For Maximum Efficiency,a Good Rule of Thumb in an AND Decision

question 37

Multiple Choice

For maximum efficiency,a good rule of thumb in an AND decision is to ____.

• A) first ask the question that is more likely to be true
• B) first ask the question that is more likely to be false
• C) rewrite it as an OR decision and ask the question more likely to be true
• D) rewrite it as an OR decision and ask the question more likely to be false

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Definitions:

Payback Period

The duration required for an investment to generate cash flows sufficient to recover its initial cost.

AAR

Average Annual Return, which measures the average return generated by an investment per year over a specified period.

NPV

Net Present Value; a method used in capital budgeting to evaluate the profitability of an investment, calculating the difference between the present value of cash inflows and outflows.

Discounted Payback Period

The time it takes for an investment to generate cash flows to recover its initial cost, accounting for the time value of money.