Which of the Following Statements About the Payback Method Is

question 7

Multiple Choice

Which of the following statements about the payback method is true?

• A) The payback method is consistent with the goal of shareholder wealth maximization
• B) The payback method represents the number of years it takes a project to recover its initial investment plus a required rate of return.
• C) There is no economic rational that links the payback method to shareholder wealth maximization.
• D) None of the above statements are true.

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Definitions:

Escape Learning

A type of conditioning where the subject learns to perform a behavior in order to terminate or avoid an unpleasant stimulus.

Negative Reinforcement

A concept in behavioral psychology where the removal of an unfavorable outcome or stimulus strengthens the behavior that led to its removal.

Positive Reinforcement

A strategy in behavior modification that involves the addition of a rewarding stimulus following a desired behavior, with the aim of increasing that behavior.

Punishment

The imposition of a penalty or sanction on an individual or entity for violating rules, norms, or expectations.