The Regular Payback Method Is Deficient in That It Does

question 98

True/False

The regular payback method is deficient in that it does not take account of cash flows beyond the payback period.The discounted payback method corrects this fault.

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Definitions:

Perfect Complements

Goods that are always used together in fixed proportions, where the utility or value of one item increases with use of the other.

Pareto Efficient

An allocation condition in resources where any attempt to favor one individual results in a disadvantage to another.

Pareto Optimal

A state of allocation of resources from which it is impossible to reallocate without making at least one individual or preference criterion worse off.

Marginal Rate of Substitution (MRS)

The marginal rate of substitution is the rate at which a consumer is willing to substitute one good for another while keeping the utility level constant.