Which of the Following Is a Correct Statement About the Discounted

question 7

Multiple Choice

Which of the following is a correct statement about the discounted payback period (DPB) technique that is used to evaluate capital budgeting projects?

• A)To compute a project's DPB, simply add up the unadjusted expected cash flows for each year until the cumulative value equals the amount that is initially invested.
• B)According to DPB, a project should be accepted when its discounted payback period is greater than its useful life.
• C)The DPB does not provide information about the liquidity of a project.
• D)The DPB method considers the time value of money.
• E)To compute a project's DPB, its internal rate of return (IRR) must be known.

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Definitions:

Z-test

A statistical analysis designed to identify variations between the means of two distinct populations, provided that the variances are predetermined and the size of the sample is substantial.

T-test

A statistical test used to compare the means of two groups or to compare a sample mean to a known value when variances are known or assumed to be equal.

Population Variances

Population variances measure the variability or spread of a population's data points from its mean, indicating how much the population data values differ from each other.

Ratio

A measure that compares two quantities by division.