Which One of the Following Is an Advantage of the Payback

question 130

Multiple Choice

Which one of the following is an advantage of the payback method of evaluating capital investment proposals?

• A) It provides a (rough) measure of project risk.
• B) It is linearly related to the net present value (NPV) of a proposed project.
• C) It considers all possible future cash flows of the project.
• D) It applies conventional discounting procedures to anticipated future cash flows.
• E) It allows managers to choose between competing projects with different useful lives.

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