Payback Is Frequently Used to Analyze Independent Projects Because

question 227

Multiple Choice

Payback is frequently used to analyze independent projects because:

• A) It considers the time value of money.
• B) All relevant cash flows are included in the analysis.
• C) The cost of the analysis is less than the potential loss from a faulty decision.
• D) It is the most desirable of all the available analytical methods from a financial perspective.
• E) It produces better decisions than those made using either NPV or IRR.

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Definitions:

Express Terms

Clearly stated conditions and stipulations in a contract, either orally or in writing, that outline the specific obligations of the parties involved.

Course of Performance

A sequence of conduct between parties to a contract that is relevant to determining their rights and duties under that agreement.

Usage of Trade

Established practices or methods commonly accepted and widely adopted in a particular industry or commerce.

Parol Evidence Rule

A legal principle that prevents parties from using oral or extrinsic evidence to contradict a written agreement.