The Primary Disadvantage of the Payback Period Is That

question 85

Multiple Choice

The primary disadvantage of the payback period is that:

• A) it incorporates all cash flows that occur after the payback period.
• B) it is highly complex.
• C) it does not allow the comparisons of alternatives.
• D) it disregards the time value of money.

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Definitions:

Reserve Requirement

A regulation set by central banks that determines the minimum amount of reserves that banks must hold against deposits.

Gross National Income

The total domestic and foreign output claimed by residents of a country, consisting of GDP plus factor incomes earned by foreign residents, minus income earned in the domestic economy by nonresidents.

Net National Income

The total income of a nation after adding all payments from abroad and subtracting all payments to abroad, including depreciation.

Gross National Product

The total market value of all the goods and services produced by a country's residents and businesses over a specified period.