Which of the Following Statements Is False

question 67

Multiple Choice

Which of the following statements is false?

• A) The main virtue of the payback method is its simplicity.
• B) Some managers believe the payback method implicitly accounts for the riskiness of longer-term projects.
• C) Some managers may prefer the payback method because it leads to accepting projects that payback quickly which may be ideal for them in terms of building their short-term career.
• D) The payback method considers all cash flows for a project, even those occurring after the payback period.
• E) Both (a) and (d) are false

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Definitions:

Incorrect Decisions

Decision-making instances that lead to unfavorable outcomes or failures due to errors in judgement, analysis, or implementation.

Target AAR

Target Average Annual Return (AAR) is a financial goal or benchmark for the average yearly return on an investment.

Project AAR

The Average Annual Return of a project, calculated by dividing the total return by the number of years.

Accepted

Recognized as valid, suitable, or conforming to a standard or requirement.