The Payback Method

question 60

Multiple Choice

The payback method

• A)discounts all cash flows properly.
• B)requires each firm to set a firmwide cash flow cutoff period.
• C)considers all relevant cash flows.
• D)superior to the net present value method.
• E)ignores the time value of money.

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Definitions:

Consensual Secured Transaction

A financial agreement where both parties agree to the deal, and collateral is provided to secure the transaction.

Debtor

An individual or corporation that owes money or a debt to another, known as the creditor.

Collateral

Assets pledged as security for the repayment of a loan, forfeitable in the event of a default.

Contractual Defenses

Legal arguments that can be used to challenge the enforceability of a contract, such as incapacity, duress, or fraud.