Which of the Following Statements Is Correct? Assume That the Project

question 54

Multiple Choice

Which of the following statements is correct? Assume that the project being considered has normal cash flows,with one outflow followed by a series of inflows.

• A)The longer a project's payback period, the more desirable the project is normally considered to be by this criterion.
• B)One drawback of the payback criterion for evaluating projects is that this method does not properly account for the time value of money.
• C)If a project's payback is positive, then the project should be rejected because it must have a negative NPV.
• D)The regular payback ignores cash flows beyond the payback period, but the discounted payback method overcomes this problem.

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Definitions:

Tax Rate

The percentage at which an individual or corporation is taxed. The tax rate may vary based on income level, type of income, or other factors.

IOS

Stands for Input/Output System or alternatively, iOS, Apple Inc.'s mobile operating system used for its iPhones and iPads, depending on context.

IRRs

The Internal Rate of Return is a financial measurement utilized to assess the projected profitability of future investments.

After-Tax Cost

After-Tax Cost is the expense associated with a transaction or activity, taking into account the effect of income tax deductions or liabilities.