The Advantage(s) of the Payback Method of Evaluating Investment Proposals

question 104

Multiple Choice

The advantage(s) of the payback method of evaluating investment proposals is/are:
i. it recognises the time value of money.
ii. it is easy to calculate and understand.
iii. it recognises cash flows beyond the payback period.
Which of the above statements is/are true?

• A) i and ii
• B) ii and iii
• C) ii
• D) All of the given answers

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Definitions:

Retirement Portfolio

A collection of financial investments specifically chosen and managed to support an individual's financial needs in retirement.

Stocks

Shares of ownership in a company, that represent a claim on the company's earnings and assets.

Annuities

Financial products that provide a stream of payments for a fixed period or for the lifetime of the annuitant, typically used for retirement savings.

Commodities

Basic goods used in commerce that are interchangeable with other goods of the same type, such as oil, gold, and wheat.