In Considering the Payback Period

question 7

Multiple Choice

In considering the payback period:

• A)The maximum period allowed by a firm is a specific time period based on objective criteria.
• B)It considers the time value of money in determining the maximum allowable time period.
• C)It gives some indication of a project's desirability from a liquidity viewpoint.
• D)It is based on cash flows both during and after the payback period.

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Definitions:

Incentives

Factors, either monetary or non-monetary, that motivate individuals or businesses to act in a certain way.

Scarce

A characteristic of resources that are limited in availability, which can lead to competition for their use.

Freely Available

Resources, information, or products that can be accessed or obtained without any payment or restrictions.

Economic Choice

Economic choice involves making decisions on the allocation of scarce resources among competing needs or desires to maximize benefits and utility.