Which of the Following Statements Is True of a Project

question 34

Multiple Choice

Which of the following statements is true of a project with a long payback period?

• A) A long payback period increases the project's risk.
• B) A long payback period ensures enough liquidity for the firm.
• C) A long payback period ensures positive net present value of the project.
• D) A long payback period results in the expected rate of return being more than the internal rate of return.
• E) A long payback period results in the terminal value of the project being higher than the present value of its cash outflows.

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Definitions:

Population Proportion

The ratio of a specific subgroup within a population to the entire population, typically expressed as a percentage.

Independent Random Samples

Samples selected from a population in such a way that each member has an equal chance of being chosen, with no dependence between the selections.

Standard Error

The standard deviation of the sampling distribution of a statistic, commonly used to estimate the accuracy of sample mean as a predictor of the population mean.

Pooled Estimate

Combining estimates from different populations to obtain a single estimate that is more accurate and has a higher power due to a larger sample size.