Webbe) Payback A Net present value: a) is the best method of analyzing mutually exclusive projects. b) is less useful than the internal rate of return when comparing different-sized projects. c) is the easiest method of evaluation for non-financial managers. d) cannot be applied when comparing mutually exclusive projects. WebbThe advantage(s) of the discounted payback method over the payback method of project analysis include: I. ease of use. II. liquidity bias. III. arbitrary cutoff point. IV. the consideration of time value of money. V. works well for research and development projects
Exam 3- Ch. 9 Flashcards Quizlet
WebbAnswer: D Difficulty: 1 Easy Section: 5 The Payback Period Method Topic: Payback Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation. Payback is frequently used to analyze independent projects because: A) it considers the time value of money. B) all relevant cash flows are included in the analysis. WebbI. The project must also be acceptable under the payback rule. II. The project must have a profitability index that is equal to or greater than 1.0. III. The project must have a zero net present value. IV. The project's internal rate of return must equal the required return. huntington country club huntington ny
Significance of Payback Analysis in Decision-making
WebbThe payback period is one of the most straightforward metrics a person can use to analyze capital projects. If you are in a hurry or don't have the luxury of a calculator, the payback period may be the method of choice. However, it isn't without its shortfalls, and for that, we recommend using NPV or IRR whenever you are close to a calculator. WebbThe payback period is the length of time it takes an investment to generate sufficient cash flows to enable the project to: A. produce a positive annual cash flow. B. produce a positive cash flow from assets. C. offset its fixed expenses. D. offset its total expenses. E. recoup its initial cost. D WebbThe payback period is considered a method of analysis with serious limitations and qualifications for its use, because it does not account for the time value of money, risk,financing, or other important considerations, such as the opportunity cost. huntington country club membership fees