The Discounted Payback Rule May Cause

question 73

Multiple Choice

The discounted payback rule may cause:

• A) some positive net present value projects to be rejected.
• B) the most liquid projects to be rejected in favor of less liquid projects.
• C) projects to be incorrectly accepted due to ignoring the time value of money.
• D) some projects with negative net present values to be accepted.
• E) Both some positive net present value projects to be rejected; and some projects with negative net present values to be accepted.

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Definitions:

Monopolies

Economic situations where a single company or entity controls all or nearly all of the market for a particular type of product or service.

Standard Oil

Standard Oil was an American oil producing, transporting, refining, and marketing company. Established by John D. Rockefeller in 1870, it became the largest and first multinational corporation in the world before being dismantled in 1911 due to antitrust laws.

Upton Sinclair

An American writer and reformer, best known for his novel "The Jungle" (1906), which exposed the harsh conditions of the meatpacking industry.

Hetch Hetchy

A valley in Yosemite National Park, which was controversially dammed in the early 20th century to provide water to San Francisco.