Which of the Following Statements Is CORRECT? Assume That the Project

question 62

Multiple Choice

Which of the following statements is CORRECT? Assume that the project being considered has normal cash flows,with one outflow followed by a series of inflows.

• A) The longer a project's payback period,the more desirable the project is normally considered to be by this criterion.
• B) One drawback of the payback criterion for evaluating projects is that this method does not properly account for the time value of money.
• C) If a project's payback is positive,then the project should be rejected because it must have a negative NPV.
• D) The regular payback ignores cash flows beyond the payback period,but the discounted payback method overcomes this problem.
• E) If a company uses the same payback requirement to evaluate all projects,say it requires a payback of 4 years or less,then the company will tend to reject projects with relatively short lives and accept long-lived projects,and this will cause its risk to increase over time.

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Definitions:

Carrying Capacity

The maximum population size of a species that the environment can sustain indefinitely, given the food, habitat, water, and other necessities available in the environment.

Moose Population

A group or number of moose living within a specific area, subject to factors like predation, food availability, and environmental conditions.

Wolf Population

A group of wolves living in a specific area, whose dynamics can impact and reflect the ecological balance of their habitat.

Survivorship Curve

A graph of the number of surviving individuals of a cohort, from birth to the maximum age attained by any individual.