Which of the Statements Below Is FALSE

question 57

Multiple Choice

Which of the statements below is FALSE?

• A)Firms rarely use the payback period for small-dollar decisions.
• B)Many companies use the payback period for small-dollar decisions because the time spent gathering the accurate cash flow may be lowered substantially if it is necessary to estimate only through the first few years.
• C)Many companies use the payback period for small-dollar decisions because the future cash flows on these smaller projects may be quite difficult to accurately estimate far into the future.
• D)Many companies use the payback period for small-dollar decisions because it does prevent a serious error when the future cash flow is insufficient to recover the initial cash outlay.