If the Discounted Payback Method Is Preferable to the Payback

question 18

Multiple Choice

If the discounted payback method is preferable to the payback method,then why is the payback method ever used?

• A)The discounted payback requires an arbitrary cutoff point while payback does not.
• B)Payback is easier to compute than discounted payback.
• C)Payback considers all of a project's cash flows but discounted payback does not.
• D)Payback requires the initial investment be recovered during a project's life while the required discounted payback period may be shorter.
• E)Payback can be used with mutually exclusive projects but discounted payback cannot.

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Definitions:

Explanation

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