Which of the Following Is True of the Cash Payback

question 47

Multiple Choice

Which of the following is true of the cash payback period?

• A) The longer the payback, the longer the estimated life of the asset.
• B) The longer the payback, the sooner the cash spent on the investment is recovered.
• C) The shorter the payback, the less likely the possibility of obsolescence.
• D) All of the above are correct.

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Definitions:

Depreciated

Depreciation is the process of allocating the cost of a tangible asset over its useful life, reflecting the asset's wear and tear, deterioration, or obsolescence.

Operating Lease

A contract that allows for the use of an asset but does not convey rights of ownership of the asset, with payments made over a shorter period than the asset's useful life.

Lease Obligation

A financial commitment that represents the future payments an entity is obligated to make under lease agreements.

Statement of Financial Position

A financial report detailing an entity's assets, liabilities, and shareholders' equity at a specific point in time, offering a snapshot of its financial status.