Which Statement Regarding Payback Is True

question 120

Multiple Choice

Which statement regarding payback is true?

• A)The regular payback method recognizes all cash flows over a project's life.
• B)The discounted payback method recognizes all cash flows over a project's life, and it also adjusts these cash flows to account for the time value of money.
• C)The regular payback method was widely used years ago, but virtually no companies even calculate the payback today.
• D)The regular payback is useful as an indicator of a project's liquidity because it gives managers an idea of how long it will take to recover the funds invested in a project.

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Definitions:

Experimental Methods

Research designs involving the manipulation of variables to determine cause-and-effect relationships.

Nonexperimental Methods

Research designs that do not involve the manipulation of variables or random assignment of participants.

Randomization

Controlling for the effects of extraneous variables by ensuring that the variables operate in a manner determined entirely by chance.

Experimental Control

Eliminating the influence of an extraneous variable on the outcome of an experiment by keeping the variable constant in the experimental and control groups.