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.

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Definitions:

Judicious

Showcasing good judgment or prudent decision-making.

Proposed Plan

A suggested course of action or strategy, typically presented for consideration, approval, or implementation.

Risky Shift

A phenomenon where group decisions tend to be riskier than the average of the individual choices initially proposed by the group members.

Conservative Shift

A psychological theory indicating that groups tend to make decisions that are more risk-averse or conservative than individual members would make alone.