Which of the Following Is a Drawback of the Payback

question 95

Multiple Choice

Which of the following is a drawback of the payback period?

• A)It ignores a project's total profitability.
• B)It uses a set discount rate.
• C)It considers total profitability, requiring the forecasting of all future cash flows.
• D)It uses before-tax cash flows rather than after-tax cash flows.

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Definitions:

Market Demand Curve

A graphical representation of the quantity of goods demanded at various prices by all consumers in the market.

Consumer Surplus

The divergence in the anticipated price for a good or service by consumers and the actual price they pay.

Willingness to Pay

The maximum amount a consumer is prepared to spend on a good or service, reflecting the perceived value of the good or service to the consumer.

Next-Best Alternative

The best option available to someone after the top choice is taken away, frequently referenced in the context of opportunity cost.