Which of the Following Statements Is False

question 66

Multiple Choice

Which of the following statements is false?

• A) The payback rule is useful in cases where the cost of making an incorrect decision might not be large enough to justify the time required for calculating the NPV.
• B) The payback rule is reliable because it considers the time value of money and depends on the cost of capital.
• C) For most investment opportunities expenses occur initially and cash is received later.
• D) Fifty percent of firms surveyed reported using the payback rule for making decisions.

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Definitions:

Correlation Coefficient

A statistical measure that calculates the strength and direction of a linear relationship between two quantitative variables.

Negative Correlation

A relationship between two variables in which one variable increases as the other decreases, and vice versa, indicating an inverse relationship.

Interest Rates

The cost of borrowing money, expressed as a percentage of the amount borrowed, paid by the borrower to the lender for the use of funds.

House Sales

The process of buying or selling residential properties.