Why Is It Believed That Japanese Companies Prefer the Payback

question 43

Multiple Choice

Why is it believed that Japanese companies prefer the payback period over the discounted cash flow methods for evaluating capital investment alternatives?

• A) It is consistent with their corporate strategy of investing in new technology.
• B) Japanese companies compete using very short product life cycles.
• C) Cash flows over a long period of time are difficult to predict with much accuracy.
• D) All of the above

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Definitions:

Reported Yield

The interest or dividends received from an investment, expressed as a percentage of the investment's current market value.

Required Return

The minimum rate of return an investor expects to achieve from an investment, considering its risk.

Expected Dividend

The forecasted payment of profits by a corporation to its shareholders, usually announced by the company's board of directors.