Which of the Following Best Explains the Continuing Popularity of the Payback

question 102

Multiple Choice

Which of the following best explains the continuing popularity of the payback method?

• A) Mathematical simplicity and some insight into the riskiness of cash flows.
• B) Uses all cash flows and takes into account the time value of money.
• C) Reliably selects the projects that add most value to the firm.
• D) It provides objective selection criteria and is taught as the primary method in most business schools.

---

Definitions:

Budgeted Selling Price

The projected price at which a product is expected to be sold, factored into business planning and budgeting processes.

Raw Materials

Basic materials and components used at the beginning of the production process to manufacture goods.

Direct Labor-Hours

The total hours worked by employees directly involved in the production of goods or services, often used as a basis for assigning manufacturing overhead costs to products.

Budgeted Sales

An estimate of the sales revenue a company plans to achieve in a specified period, often part of a larger budget plan.