The Main Advantage of the Payback Rule Is

question 7

Multiple Choice

The main advantage of the payback rule is:

• A) Adjustment for uncertainty of early cash flows
• B) It is simple to use
• C) Does not discount cash flows
• D) Both A and C

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Definitions:

Real Rate Of Return

The yearly percent yield earned from an investment, after accounting for variations in price caused by inflation or various external influences.

Inflation Rate

The escalation in overall prices for goods and services, leading to a drop in how much can be bought.

Annual

Relating to or denoting a period of one year.

Nominal Rate

The stated interest rate of a financial product, not adjusted for inflation, representing the face value of interest payments.