Two Investments with Exactly the Same Payback Periods Are Not

question 113

True/False

Two investments with exactly the same payback periods are not equally valuable to an investor because the timing of net cash flows may be different.

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Definitions:

Average Product

The output produced per unit of a resource employed, calculated by dividing total product by the quantity of the resource used.

Labor

The application of human mental and physical endeavors in the manufacture of products and provision of services.

Fixed Input

Resource in production that cannot be changed in the short term, such as buildings and machinery.

Long Run

A period in which all factors of production and costs are variable, allowing for full adjustment to any change in market conditions.