Which of the Following Statements Is NOT a Disadvantage of the Regular

question 31

Multiple Choice

Which of the following statements is NOT a disadvantage of the regular payback method?

• A) ignores cash flows beyond the payback period.
• B) does not directly account for the time value of money.
• C) does not provide any indication regarding a project's liquidity or risk.
• D) does not take account of differences in size among projects.
• E) lacks an objective, market-determined benchmark for making decisions.

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Definitions:

Non-Monetary Benefits

Advantages or perks associated with a job or situation that are not in the form of money, such as health insurance or flexible working hours.

Hotelling Rule

A theory in economics that states the net price (price minus extraction costs) of a non-renewable resource should increase at the rate of interest over time.

Exhaustible Resource

A natural resource that can be depleted and is not replenished over a short geological time frame.

Discount Rate

The discount rate is the interest rate used in discounted cash flow analysis to determine the present value of future cash flows, reflecting the time value of money and risk.