The Following Are Disadvantages of Using the Payback Rule EXCEPT

question 12

Multiple Choice

The following are disadvantages of using the payback rule EXCEPT the rule:

• A)ignores all cash flow after the cutoff date.
• B)does not use the time value of money.
• C)is easy to calculate and use.
• D)does not have the value additivity property.

Calculate the needed fixed assets for projected sales growth.

Understand the concept of external financing needed for growth and how to calculate it.

Learn the impact of maintaining constant ratios (debt-equity ratio, dividend payout ratio) on firm growth.

Interpret financial ratios and their implications on firm’s growth and financial health.

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Definitions:

Yearly Salary Increases

Regular, annual raises in the amount of money an employee receives as compensation from their employer, often reflecting performance or inflation adjustments.

Major Decisions

Significant choices made by individuals or organizations that have a large impact on outcomes or future directions.

Steep Hierarchy

An organizational structure characterized by a pronounced or rigid vertical differentiation and a high level of control at the top.

Middle Manager

A managerial position that involves overseeing the work of lower-level managers and possibly reporting to a higher-level manager, functioning as an intermediary within an organization.