Only One of the Following Features Is Characteristic of a Payback

question 25

Multiple Choice

Only one of the following features is characteristic of a payback period.Identify this feature.

• A)uses discounting
• B)ignores cash flows beyond the payback period
• C)equivalent to net present value
• D)considers time value of money

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Definitions:

Market Fail

A situation where the allocation of goods and services by a market is not efficient, typically due to reasons like externalities, market power, or public goods.

External Benefit

A positive effect of a transaction or activity on a third party who is not involved in the transaction, also known as a positive externality.

Private Decisions

Choices made by individuals or businesses in the private sector, typically regarding consumption, investment, or production.

Efficiency

The effectiveness with which resources are used to achieve a desired outcome, maximizing outputs from given inputs without waste.