Identify Which of the Following Statements Regarding the Payback Model

question 148

Multiple Choice

Identify which of the following statements regarding the payback model is false.

• A)The payback model measures how quickly investment dollars may be recouped.
• B)The payback model measures profitability.
• C)A project with a shorter payback time is not necessarily preferable to one with a longer payback time.
• D)The payback model provides a rough estimate of risk.

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Definitions:

International Accounting Standards Board

An independent organization that establishes accounting standards known as International Financial Reporting Standards (IFRS) used globally.

Double Taxation

A taxation principle referring to income taxes paid twice on the same source of earned income, occurring typically with corporate dividends taxed at both the corporate and individual level.

Corporation

A legal entity that is separate and distinct from its owners, offering limited liability, ease of transferability of shares, and perpetual succession.

Partnership

A legal form of business operation between two or more individuals who share management and profits or losses.