Which of the Following Is a Correct Statement About the Traditional

question 31

Multiple Choice

Which of the following is a correct statement about the traditional payback period (PB) method that is used to evaluate capital budgeting projects?

• A)To compute a project's PB, simply add up the expected cash flows for each year until the cumulative value equals the amount that is initially invested.
• B)To compute a project's PB, simply add up the discounted cash flows for each year until the cumulative value equals the amount that is initially invested.
• C)The PB gives a direct measure of the dollar change in the firm's value if the project is purchased.
• D)The PB considers the time value of money.
• E)The PB does not provide information about the risk associated with the recapture of the original amount invested in a project.

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Definitions:

Distributed

A term in logic referring to when all instances of a subject are accounted for in a statement.

I Proposition

In traditional logic, an affirmative proposition making a claim that some subject is part of the extension of some predicate, as in "Some S are P."

Distributed

In logic, refers to a term that applies to all members of the category it describes.

Unstated Premise

An implicit assumption in an argument that is not directly expressed but required for the argument's validity.