The Payback Method Has All of the Following Advantages EXCEPT

question 97

Multiple Choice

The payback method has all of the following advantages EXCEPT:

• A)It considers the time value of money
• B)It determines a firm's financial exposure
• C)It is easy to calculate
• D)It determines if the project under consideration will be able to replace the start-up costs.

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Definitions:

Return On Investment

A profitability ratio that calculates the return gained on an investment relative to the investment’s cost.

Investment Opportunity

Investment Opportunity is a term used to describe a business, project, or asset that has the potential to generate significant financial returns or profits.

Minimum Required Rate

The lowest acceptable rate of return on an investment, set by the investor.

Throughput Time

The total amount of time it takes for a product to move through the entire production process, from start to finish.