Which of the Statements Below Is FALSE

question 57

Multiple Choice

Which of the statements below is FALSE?

• A)Firms rarely use the payback period for small-dollar decisions.
• B)Many companies use the payback period for small-dollar decisions because the time spent gathering the accurate cash flow may be lowered substantially if it is necessary to estimate only through the first few years.
• C)Many companies use the payback period for small-dollar decisions because the future cash flows on these smaller projects may be quite difficult to accurately estimate far into the future.
• D)Many companies use the payback period for small-dollar decisions because it does prevent a serious error when the future cash flow is insufficient to recover the initial cash outlay.

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Definitions:

Perpetuity

An annuity that pays a set amount of money indefinitely, with no end date.

Annuity

A financial product that provides fixed or variable payments to an individual at regular intervals, often used as part of retirement planning.

Number Of Time Periods

The total count of distinct time intervals considered in an analysis, calculation, or model, often pertaining to finance or statistics.

Future Value

The worth in the future of an asset or cash, which is equal to a specific sum valued today.