Which of the Following Is False Concerning the Payback Method

question 193

Multiple Choice

Which of the following is false concerning the payback method of capital budgeting?

• A)It uses the accrual accounting rate of return.
• B)The payback method highlights liquidity.
• C)Its major strength is that it that it is easy to use.
• D)It does not consider cash flows after the recovery of the initial investment.
• E)Shorter payback periods give an organization more flexibility.

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Definitions:

Rent

A payment made by tenants to landlords in exchange for the use of real estate, equipment, or other properties.

Marginal Physical Product

The additional output that can be produced by adding one more unit of a specific input, holding all other inputs constant.

MRP

Marginal Revenue Product; the additional revenue generated from employing one more unit of input or labor.

Derived Demand

Demand for resources derived from demand for the final product.