The payback method of analysis ignoresMultiple Choiceannual savings.monthly net cash flows.the initial cost of the investment.the time value of money.

In payback method one finds out *1 pointa. the period necessary to invest the cost of the systemb. the time required for the full benefits to accruec. the time at which benefits exceed costd. whether the system is able to payback amount invested

Multiple Choice QuestionA company is considering two capital investments. Each requires an initial investment of $15,000 and has a 4 year useful life. Investment A has expected cash inflows of $5,000 each year for the 4 years for total cash inflows of $20,000. Investment B has the following expected cash flows: Year 1: $8,000; Year 2: $6,000; Year 3: $4,000; Year 4: $2,000; Total cash flows: $20,000. Using the payback period as the evaluation method, which investment should be chosen by management?Multiple choice question.Investment BInvestment ABoth investments have the same payback period.

The discounted payback period is a capital budgeting criterion that accounts for:a.The time value of moneyb.The accounting rate of return (ARR)c.The payback periodd.The profitability index (PI)Clear my choice

Activity 2: Concept Check (Payback) Q1) Which of the following statements is FALSE? A Payback period refers to the number of periods take to recover the initial investment of a project. B The payback rule is reliable because it considers the time value of money and depends on the cost of capital. C The payback rule is primarily used because of its simplicity. D The payback rule is useful in cases where the cost of making an incorrect decision might not be large enough to justify the time required for calculating the NPV. SUBMIT

Multiple Choice QuestionThe capital investment evaluation method that subtracts the initial investment from the discounted future net cash flows from the investment at the required rate of return is the: Multiple choice question.payback periodinternal rate of returnaccounting rate of returnnet present value