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Which of the following statements is CORRECT?
Answer
a. The regular payback is useful as an indicator of a project’s liquidity because it gives managers an idea of how long it will take to recover the funds invested in a project.
b. The regular payback method was, years ago, widely used, but virtually no companies even calculate the payback today.
c. The discounted payback method recognizes all cash flows over a project’s life, and it also adjusts these cash flows to account for the time value of money.
d. The regular payback method recognizes all cash flows over a project’s life.
e. The regular payback does not consider cash flows beyond the payback year, but the discounted payback overcomes this defect.
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WhichofthefollowingstatementsisCORRECT?
Answer
a.Theregularpaybackisusefulasanindicatorofaprojectsliquiditybecauseitgivesmanagers
anideaofhowlongitwilltaketorecoverthefundsinvestedinaproject....