One Disadvantage of the Payback Period Is That

question 24

Multiple Choice

One disadvantage of the payback period is that

• A) it is sometimes used as a crude measure of risk.
• B) managers may choose investments with quick payback periods to maximize short term criteria on which their own bonuses, etc.may be based.
• C) it cannot be used for investments with unequal cash inflows.
• D) it cannot be used if the entire cost of the investment does not occur immediately.
• E) All of these.

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Definitions:

Negligence

The failure to take appropriate care in doing something, leading to damage or injury to another.

Worn Down Brakes

A condition of vehicle brakes where the brake pads or shoes have been used to the point of reduced effectiveness, posing safety risks.

Sue

The act of bringing a legal action against an individual, entity, or organization, seeking redress or enforcement of rights through a judicial process.

Reasonable Foreseeability Test

A test of whether a duty of care is owed, based on what a person should have anticipated would be the consequences of his action.