Which of the Following Statements Is CORRECT

question 84

Multiple Choice

Which of the following statements is CORRECT?

• A) The regular payback method recognizes all cash flows over a project's life.
• B) The discounted payback method recognizes all cash flows over a project's life,and it also adjusts these cash flows to account for the time value of money.
• C) The regular payback method was,years ago,widely used,but virtually no companies even calculate the payback today.
• D) The regular payback is useful as an indicator of a project's liquidity because it gives managers an idea of how long it will take to recover the funds invested in a project.
• E) The regular payback does not consider cash flows beyond the payback year,but the discounted payback overcomes this defect.

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Definitions:

Opportunity Cost

The cost of forgoing the next best alternative when making a decision, representing the benefits one could have received by choosing differently.

Pizza

A popular dish of Italian origin, consisting of a flat, round base of dough baked with a topping of tomato sauce and cheese, often with added meat, fish, or vegetables.

Beer

An alcoholic beverage made from barley, hops, water, and yeast through a fermentation process.

Pints

A measure of volume often used for liquids, approximately equal to half a liter or 16 US fluid ounces.