Which of the Following Statements About the Evaluation of an Investment

question 144

Multiple Choice

Which of the following statements about the evaluation of an investment having uneven cash flows using the payback method is correct?

• A) It CANNOT be done.
• B) It can be done only by matching cash inflows and investment outflows on a year-by-year basis.
• C) It will produce essentially the same results as those obtained through the use of discounted cash flow techniques.
• D) It requires the use of a sophisticated calculator or computer software.

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Definitions:

Student Loans

Financial borrowings aimed at financing higher education expenses, subject to repayment with interest.

Interest Rate

The amount charged by a lender to a borrower for the use of assets, usually expressed as a percentage of the principal.

Monthly Payment

Periodic payments made towards loans, typically calculated monthly, covering interest and principal repayment.

Rate of Return

The rate of return is a measure of the profitability of an investment, calculated as the percentage of the total amount of returned income to the amount of the investment’s initial cost.