Advantages of the Payback Method Include the Following

question 24

Multiple Choice

Advantages of the payback method include the following.

• A) The technique is simple for managers to compute and interpret.
• B) It is a good measure of liquidity risk.
• C) Both a and b,
• D) None of the above.

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Definitions:

Warranty Period

The specific time frame during which a manufacturer or seller commits to repair or replace defective products.

Prevention Cost

Expenses incurred to avoid or minimize the number of defects in products, part of quality costs including training, quality planning, and product design.

Quality Cost Report

A financial statement detailing the costs associated with preventing, detecting, and addressing product or service defects.

Internal Failure Cost

Costs incurred when a product or service fails to meet quality standards before it is delivered to the customer, including scrap and rework costs.