The Payback Period Rule Accepts All Investment Projects in Which

question 49

Multiple Choice

The payback period rule accepts all investment projects in which the payback period for the cash flows is:

• A)equal to the cut-off point.
• B)greater than the cut-off point.
• C)less than the cut-off point.
• D)positive.
• E)None of the above.

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Definitions:

Model Inputs

The variables and parameters fed into a model to simulate different scenarios and predict outcomes.

Plowback Rate

The percentage of profits a company retains and reinvests in its operations rather than distributing to shareholders as dividends.

Dividend-Payout Rate

This term represents the proportion of earnings a company pays its shareholders in dividends, showcasing a strategy of sharing profits.

P/E Ratio

A valuation ratio of a company's current share price compared to its per-share earnings, used to evaluate if the stock is over or underpriced.