Which of the Following Statements Is CORRECT

question 104

Multiple Choice

Which of the following statements is CORRECT?

• A) 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.
• B) The regular payback method was, years ago, widely used, but virtually no companies even calculate the payback today.
• C) 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.
• D) The regular payback does not consider cash flows beyond the payback year, but the discounted payback overcomes this defect.
• E) The regular payback method recognizes all cash flows over a project's life.

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Definitions:

Technological Change

The process of invention, innovation, and diffusion of technology or processes which significantly alters the way goods or services are produced.

Productivity

A measure of the efficiency of production, often quantified as the ratio of outputs produced to inputs used in the production process over a defined period of time.

American Economy

The economic system of the United States, characterized by a mix of private and public enterprises and a relatively high level of technological innovation and productivity.

Savings Rate

The Savings Rate is a measure indicating the proportion of income that households save rather than spend on consumption.