Payback Is Frequently Used to Analyze Independent Projects Because

question 87

Multiple Choice

Payback is frequently used to analyze independent projects because:

• A)it considers the time value of money.
• B)all relevant cash flows are included in the analysis.
• C)it is easy and quick to calculate.
• D)it is the most desirable of all the available analytical methods from a financial perspective.
• E)it produces better decisions than those made using either NPV or IRR.

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Definitions:

Elasticity of Product Demand

A measure of the responsiveness of the quantity demanded of a product to changes in its price.

Elasticity of Resource Demand

The measure of how much the quantity demanded of a resource changes in response to a change in its price.

MRP

Marginal Revenue Product, which is the additional revenue generated from employing one more unit of a resource.

Wage Rate

The amount of money paid to an employee per unit of time worked, often hourly, daily, or annually.