The Payback Method

question 39

Multiple Choice

The payback method:

• A)determines a cutoff point so that all projects accepted by the NPV rule will be accepted by the payback period rule.
• B)determines a cutoff point equal to the point where all initial capital investments have been fully depreciated.
• C)requires an arbitrary choice of a cutoff point.
• D)varies the cutoff point with the market rate of interest.
• E)is irrelevant to the accept/reject decision.

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Definitions:

Illumination

The delivery of light to an area, making it visible or more brightly lit; also refers to understanding or enlightenment.

Weber Fraction

A measure in psychophysics that quantifies the perception of change in a given stimulus relative to its intensity.

Visual Discriminations

The ability to perceive and differentiate visual stimuli and fine details among similar objects or forms.

Auditory Discriminations

The ability to notice, compare, and distinguish between different sounds, integral to language development and communication.