Although Quick and Easy to Apply, the Payback Method Is

question 19

Multiple Choice

Although quick and easy to apply, the payback method is deficient. In that it:

• A)disregards the time value of money.
• B)it assumes that inflows are reinvested at the internal rate of return until the end of the project's life.
• C)disregards cash flows after the payback period.
• D)a and c

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Definitions:

Book Value

The amount of an asset's value as recorded in the company's books, representing its initial cost minus any depreciation, amortization, or impairment costs.

Acquisition

The act of acquiring control of another company or business unit by purchasing its shares or assets.

Consolidated Additional Paid-in Capital

The excess amount investors pay over the par value of shares, aggregated from all subsidiaries of a parent company and reported on the consolidated financial statements.

Additional Paid-in Capital

The amount of money investors have paid for shares above their nominal value during the issuance of stock.