Refer to the Table Below,which Shows the Results of Payback,net

question 57

Multiple Choice

Refer to the table below,which shows the results of payback,net present value,and internal rate of return analysis of four projects.Which is preferred by the payback criterion?
$$\begin{array} { | l | c | c | c | c | } \hline { } & \text { A } & \text { B } & \text { C } & \text { D } \\\hline \text { Payback } & 3 & 5 & 8 & 5 \\\hline \text { NPV } & \$ 67.95 & \$ 200.96 & \$ 256.78 & \$ 669.85 \\\hline \text { IRR } & 12.59 \% & 11.81 \% & 10.93 \% & 11.81 \% \\\hline\end{array}$$

• A)Project A
• B)Project B
• C)Project C
• D)Project D

---

Definitions:

Variable Expense Ratio

A ratio computed by dividing variable expenses by sales.

Break-even Analysis

A calculation to determine the sales volume at which total revenues equal total costs, indicating no profit or loss.

Contribution Margin Ratios

The ratio of contribution margin (sales minus variable costs) to sales revenue, indicating the percentage of sales revenue that exceeds variable costs.

Break-even Point

The production level at which total revenues equal total expenses, resulting in no profit or loss.