Indicate Whether Each of the Following Statements Is True or False

question 114

Short Answer

Indicate whether each of the following statements is true or false.
The payback method does not take the time value of money into account.______
The unadjusted rate of return indicates the length of time required to recover the initial cost of an investment.______
The payback period can only be calculated for capital investments that are expected to provide equal annual cash inflows over their useful lives.______
Generally,investments with shorter payback periods are preferred.______
Use of the payback method to analyze capital investments is the best way of identifying the projects that will make the greatest contribution to a company's profits.______

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Definitions:

Dual Labor Market Theory

A theory suggesting the labor market is divided into two segments—the primary (high wage, good jobs) and the secondary (low wage, poor quality jobs) sectors.

Productivity Growth

The increase in the efficiency of production, measured by the amount of goods and services produced per unit of input.

Unionized Workers

Employees who are members of a union, which is an organized association formed to protect and further their rights and interests.

Substitution Effect

The economic understanding that as prices rise or income decreases, consumers will replace more expensive items with less costly alternatives.