The Principal Weakness of the Payback Method for Evaluating Proposed

question 64

Multiple Choice

The principal weakness of the payback method for evaluating proposed investments is that it does not:

• A)provide a way of ranking projects in order of desirability.
• B)consider cash flows that continue after the investment has been recovered.
• C)result in an easily understood "answer."
• D)recognize the time value of money.

Analyze and classify costs into variable and fixed based on an account analysis.

Understand the behavior of fixed and variable costs in relation to production levels.

Distinguish between committed and discretionary fixed costs.

Identify the characteristics and examples of variable costs.

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Definitions:

Mission Statement

A formal summary of the aims and values of a company, organization, or individual, providing a clear direction and purpose.

Corporate Philosophy

entails the values, beliefs, and principles that guide a company's operations, shaping its culture and strategic direction.

Local Environment

The immediate surroundings or conditions in which an organization operates, including the social, cultural, and economic aspects influencing its performance.

Organisational Culture

The shared values, beliefs, and norms that influence the way employees behave within an organization.