Which One of the Following Statements About the Payback Method

question 103

Multiple Choice

Which one of the following statements about the payback method of capital budgeting is correct?

• A)The payback method does not consider the time value of money.
• B)The payback method considers cash flows after the payback has been reached.
• C)The payback method uses discounted cash flow techniques.
• D)The payback method will lead to the same decision as other methods of capital budgeting.

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Definitions:

Scanlon Plan

A type of gainsharing program that rewards employees for productivity improvements and cost savings within a company.

Labor Costs

Expenses associated with compensating employees, including wages, benefits, and taxes.

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Established benchmarks of excellence and guidelines that dictate the expected level of product or service performance within an industry.

Standard Production Time

The set amount of time expected for the completion of a specific task or the manufacture of a product under normal conditions.