Applying the Discounted Payback Decision Rule to All Projects May

question 23

Multiple Choice

Applying the discounted payback decision rule to all projects may cause: 

• A) some positive net present value projects to be rejected. 
• B) the most liquid projects to be rejected in favor of the less liquid projects. 
• C) projects to be incorrectly accepted due to ignoring the time value of money. 
• D) a firm to become more long-term focused. 
• E) some projects to be accepted which would otherwise be rejected under the payback rule. 

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Definitions:

Dependent Means

Pertains to a statistical analysis involving paired or matched samples, comparing the means between two related groups.

Directional Hypothesis

A hypothesis that predicts not only a relationship but also the direction of the relationship between two variables or groups.

Alpha

A threshold value used in statistics to determine the significance level below which a null hypothesis is rejected in a hypothesis test.

Non-directional Hypothesis

A hypothesis that specifies there is a difference or relationship, but not the direction of the difference or relationship between variables.