If the Discounted Payback Method Is Preferable to the Payback

question 18

Multiple Choice

If the discounted payback method is preferable to the payback method,then why is the payback method ever used?

• A)The discounted payback requires an arbitrary cutoff point while payback does not.
• B)Payback is easier to compute than discounted payback.
• C)Payback considers all of a project's cash flows but discounted payback does not.
• D)Payback requires the initial investment be recovered during a project's life while the required discounted payback period may be shorter.
• E)Payback can be used with mutually exclusive projects but discounted payback cannot.

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Definitions:

Kulik

Refers to James Kulik, a psychologist who contributed to the understanding of the effects of feedback on learning and the benefits of computer-based instruction.

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A theory that proposes that individuals are motivated by a desire for fairness and equity in their relationships and will take actions to maintain or restore equity.

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Characterized by a lack of interest, enthusiasm, or concern for things that others find moving or exciting.

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