Use the Following Statements to Answer This Question

question 22

Multiple Choice

Use the following statements to answer this question:
I.The payback period is always longer than the discounted payback period.
II.Both the discounted payback and payback period ignore cash flows beyond the cut-off period.

• A)I and II are correct.
• B)I and II are incorrect.
• C)I is correct and II is incorrect.
• D)I is incorrect and II is correct.

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Definitions:

Outstanding Shares

The total shares of stock that are owned by shareholders, including restricted shares.

Rights Offering

A financial mechanism in which current shareholders are given the right to purchase additional shares of the company at a specified price before the shares are offered to the public.

Market Price

The present cost for purchasing or selling a good or service in a specific market.

Subscription Price

The set price at which existing shareholders can purchase additional shares of stock in a company, often during a rights offering.