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:

Profit Centers

Divisions or branches within a company that are treated as separate business units, with their own revenues and expenses.

Division Revenues

The total income generated by a specific division or segment of a company from its operational activities.

Division Profits

The earnings generated by a specific division within a larger company, highlighting its financial performance.

Company-wide Profit

The total earnings or net income generated by all operations and departments of a business.