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.

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Definitions:

iPads

A line of tablet computers designed, developed, and marketed by Apple Inc., known for their touch screen interface and wide range of applications.

Laptop Computers

Portable personal computers with a clamshell form factor, suitable for mobile use and equipped with advanced computing capabilities.

Income Effect

The variation in a person's or an economy's earnings and the impact of this variation on the demand for a specific product or service.

Substitution Effect

The change in consumption patterns due to a change in relative prices, leading consumers to substitute one product for another.