The Cash Payback Method Is Useful Because

question 32

Multiple Choice

The cash payback method is useful because

• A)it gives a broad indication when outlays will be recovered by the firm.
• B)it gives a specific date as to when outlays will be recovered by the firm.
• C)it avoids using complicated accounting data in capital budgeting decisions.
• D)it is easy to communicate the relation between cash received and ultimate profitability of a project to everyone in the organization.

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Definitions:

Marginal Tax Rate

The rate at which the last dollar of income is taxed, representing the percentage of tax applied to your income for each tax bracket in which you qualify.

Common Stockholders' Equity

Common stockholders' equity represents the ownership interest held by common shareholders in a company, including assets minus liabilities and preferred stock equity.

Market Value

The ongoing rate at which an asset or service can be traded or acquired in the market.

Stock Dividend

A dividend payment made in the form of additional shares rather than cash.