A Disadvantage of the Payback Statistic Is That

question 50

Multiple Choice

A disadvantage of the payback statistic is that:

• A)it does not reflect the time value of money.
• B)it does not give an indication of the project's riskiness.
• C)it does not consider cash flows beyond the payback period.
• D)All of these are disadvantages of payback.

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Definitions:

Population

The entire group of individuals or instances about whom we wish to make conclusions in a statistical study.

Standard Deviation

A statistical index that signifies the distribution of data points around the mean of a dataset.

Critical Value

The threshold value that a test statistic must exceed to reject the null hypothesis in a statistical test.

Significance Level

The probability of rejecting the null hypothesis in a statistical test when it is in fact true. It is used to determine the threshold of statistical significance.