A Disadvantage of Using the Payback Period to Compare Investment

question 147

Multiple Choice

A disadvantage of using the payback period to compare investment alternatives is that:

• A) It ignores cash flows beyond the payback period.
• B) It includes the time value of money.
• C) It cannot be used when cash flows are not uniform.
• D) It cannot be used if a company records depreciation.
• E) It cannot be used to compare investments with different initial investments.

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Definitions:

Cornea

The transparent front part of the eye that covers the iris, pupil, and anterior chamber, contributing to the eye's focusing power.

Visual Migraine

A neurological syndrome that can cause visual disturbances such as temporary blindness, blurred vision, or light flashes.

Flashes

Sudden, brief bursts of light or heat, or referring to hot flashes, which are sudden feelings of warmth, often associated with menopause.

Floaters

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