Which of the Following Statements Is FALSE

question 75

Multiple Choice

Which of the following statements is FALSE?

• A) The payback rule is useful in cases where the cost of making an incorrect decision might not be large enough to justify the time required for calculating the net present value (NPV).
• B) The payback rule is reliable because it considers the time value of money and depends on the cost of capital.
• C) For most investment opportunities, expenses occur initially and cash is received later.
• D) Fifty percent of firms surveyed reported using the payback rule for making decisions.

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Definitions:

Weekly Disbursements

Refers to payments made by a business on a weekly basis, potentially including payroll, supplier payments, or other operational expenses.

Interest Rate

The fee, represented as a proportion of the principal amount, that a lender imposes on a borrower for the utilization of assets.

Initial Cash Balance

The amount of cash a company has at the beginning of a specific accounting period.

Weekly Disbursements

The process of distributing funds or payments on a weekly basis.