A Significant Advantage of the Payback Period Is That It

question 25

Multiple Choice

A significant advantage of the payback period is that it

• A) places emphasis on time value of money.
• B) allows for the proper ranking of projects.
• C) tends to reduce firm risk because it favors projects that generate early, less uncertain returns.
• D) gives proper weighting to all cash flows.

---

Definitions:

Alpha

In statistics, alpha refers to the probability of making a Type I error, which is the incorrect rejection of a true null hypothesis.

Two-Tier Wage System

A remuneration model where two distinct pay scales exist for employees within the same organization, often based on seniority or job role.

Labor Costs

The total sum of all wages, benefits, and taxes that a business must pay for its employees.

Existing Salaries

The current compensation rates for employees within an organization or industry.