A Drawback in Using the Payback Approach to Capital Budgeting

question 49

Multiple Choice

A drawback in using the payback approach to capital budgeting decisions is

• A)it doesn't account for the time value of money.
• B)it ignores cash flows beyond the payback period.
• C)it doesn't adjust for differences in the stream of cash flows.
• D)All of the above

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Definitions:

Retailer

A business or person that sells goods directly to consumers, as the final link in the supply chain from manufacturers to end buyers.

Promote Product

Marketing activities aimed at increasing awareness and interest in a product, ultimately to boost sales.

Sales Presentation

A structured pitch or demonstration by a salesperson to persuade a prospect or client to buy a product or service.

Suggest Purchase Order

A recommendation given to a client or customer about the quantity and type of goods to be bought, taking into account past purchases and future needs.