Evaluate the Following Projects Using the Payback Method Assuming a Rule

question 125

Multiple Choice

Evaluate the following projects using the payback method assuming a rule of 3 years for payback.

• A)Project A can be accepted because the payback period is 2.5 years but Project B cannot be accepted because its payback period is longer than 3 years.
• B)Project B should be accepted because even though the payback period is 2.5 years for Project A and 3.001 for project B,there is a $1,000,000 payoff in the 4th year in Project B.
• C)Project B should be accepted because you get more money paid back in the long run.
• D)Both projects can be accepted because the payback is less than 3 years.

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Definitions:

Free Enterprise Economies

Systems where businesses operate with minimal government intervention, guided by the forces of supply and demand.

Economic Role

The function or position an entity (like an individual, company, or government) plays within an economy, influencing its structure and development.

Local Finance

Relates to the funding and financial management of local governments, including revenue generation, budgeting, and expenditure on public services at a local level.

Property Taxes

Taxes imposed on property owners by local governments, calculated as a percentage of the property's value.