From a fiNance Perspective, Discounted Payback Is Considered to Be

question 81

Multiple Choice

From a finance perspective, discounted payback is considered to be a superior method of analysis as compared to payback. Why then, is discounted payback used less frequently than payback?

• A) Discounted payback applies only to long-term projects.
• B) Discounted payback is more difficult to compute and explain.
• C) Discounted payback is based on net income rather than cash flows.
• D) Discounted payback requires knowledge of a project's internal rate of return.
• E) Discounted payback is liquidity biased where payback is not.

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Definitions:

Delegates Duty

The act of assigning one's responsibilities or tasks to another person, often seen in contracts and employment relationships.

Obligated

Refers to having a legal or moral duty to do something.

Assigns Right

The transfer of rights or interests in a property or contract from one party to another.

Rent Payments

Periodic payments made by a tenant to a landlord in exchange for the right to occupy or use the property of the landlord.