Despite the Drawbacks of the Payback Method, the Entrepreneur Should

question 16

Multiple Choice

Despite the drawbacks of the payback method, the entrepreneur should continue to use it because

• A)it is very simple to use in comparison with other methods.
• B)projects with a faster payback period normally have more favorable long-term effects on earnings.
• C)it provides a faster return of funds over time.
• D)it is inexpensive.

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Definitions:

Type II Error

The failure to reject a false null hypothesis, commonly referred to as a "false negative" finding.

Sample Size

The number of observations or data points in a study or experiment.

Null Hypothesis

A statement that assumes no relationship or difference between certain variables.

Type I Error

Type I Error occurs when a true null hypothesis is incorrectly rejected, often symbolized as the false positive rate in hypothesis testing.