Many Firms Use the Payback Method as a Guideline in Capital

question 166

Multiple Choice

Many firms use the payback method as a guideline in capital investment decisions. Reasons they do so include all of the following EXCEPT

• A) it gives an implicit consideration to the timing of cash flows.
• B) it recognizes cash flows which occur after the payback period.
• C) it is a measure of risk exposure.
• D) it is easy to calculate.

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Definitions:

Job Characteristics

Attributes or aspects of a job that influence an employee's work environment and satisfaction, such as task variety, autonomy, and feedback.

Bertrand and Mullainathan

Scholars known for their contributions to the understanding of market mechanisms and behaviors, particularly in the context of labor economics and discrimination.

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