What Is NOT an Advantage of the Payback Period

question 35

Multiple Choice

What is NOT an advantage of the payback period?

• A) It is sometimes used as a crude measure of risk.
• B) It cannot be used for investments with unequal cash inflows.
• C) It cannot be used if the entire cost of the investment does not occur immediately.
• D) It encourages managers to choose projects with quick payback to maximize short-term criteria.

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Definitions:

Thermal Overload Units

Protective devices in electrical circuits that interrupt power in the event of an overload to prevent overheating, often integrated into motors and circuit breakers.

Full Load Amperes

The current drawn by an electric motor when operating at its designed capacity.

Overload Heaters

Protective devices installed in motor starters to prevent motors from overheating by mimicking the thermal characteristics of the motor under overload conditions.

Inverse Time-Delay

A characteristic of certain protective devices where the time taken to interrupt the current decreases as the magnitude of the fault current increases.