The Payback Period Rule Accepts All Investment Projects in Which

question 76

Multiple Choice

The payback period rule accepts all investment projects in which the payback period for the cash flows is:

• A)greater than one.
• B)greater than the cutoff point.
• C)less than the cutoff point.
• D)positive.
• E)None of the above.

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Definitions:

Interest Rate

The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.

Market Interest Rate

The prevailing rate at which borrowers are willing to borrow money and lenders are willing to lend money in the free market.

Money Demand Curve

A graph that shows the relationship between the quantity of money demanded and the interest rate.

Money Demand

The desire or need to hold money as opposed to investing it, influenced by interest rates and economic activity.