Which of These Is Not Generally Regarded as an Advantage

question 27

Multiple Choice

Which of these is not generally regarded as an advantage of the payback method?

• A)It emphasises early cash flows which have greater certainty.
• B)It emphasises liquidity.
• C)It minimises having to forecast too far into the future.
• D)It avoids having to take into account the time value of money.

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Definitions:

Marginal Propensity

The ratio of change in an economic variable, such as consumption or saving, to a change in another variable, like income.

Disposable Income

The net income available to individuals or households after taxes have been deducted, available for spending, saving, or investing.

Consumption

The act of using goods and services by households, contributing to the overall demand in an economy.

Consumption Function

An economic formula that represents the relationship between total consumption and gross national income.