What Are the Two Primary Drawbacks to the Payback Period

question 42

Multiple Choice

What are the two primary drawbacks to the payback period method?

• A)Difficult to calculate; ignores time value of money
• B)Difficult to calculate; only works for long projects (e.g., 5 years or more)
• C)Ignores time value of money; ignores cash flows after payback is reached
• D)Only works for long projects; ignores cash flows after payback is reached
• E)Difficult to calculate; ignores cash flows after payback is reached

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Definitions:

Fee Simple

The most complete ownership interest one can have in real property, free from conditions and with the right to use it, sell it, or pass it on after death.

Zoning Laws

Regulations governing the use, construction, and location of buildings within specific areas, aimed at ensuring a harmonious urban or rural development.

Fee Simple Absolute

The most complete form of ownership or interest that one can have in real property, without limitations or conditions attached.

Public Petition

A request made to an authority, typically a governmental entity, expressing a collective opinion or desire for a policy change or decision.