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.

---

Definitions:

Chapter 13

Chapter 13 refers to a bankruptcy procedure in the United States that allows individuals with regular income to create a plan to repay all or part of their debts.

Repayment Plan

An agreement between a borrower and lender outlining the terms for paying back borrowed money, often used to manage debt more effectively.

Court Approval

The formal acceptance or sanction of a legal action, agreement, or condition by a judge or court authority.

Involuntary Bankruptcy

A legal process initiated by creditors seeking to have a debtor declared bankrupt by a court, typically when the debtor is unable to pay outstanding debts.