Question
Which of the following are flaws of the payback method? In valuing future cash inflows, this method fails to consider the time value of money.
Which of the following are flaws of the payback method?
| In valuing future cash inflows, this method fails to consider the time value of money. |
| It ignores large cash inflows which occur after the payback of the project. |
| a and b are both flaws of the payback method. |
| There are no serious flaws to the payback method, which is why it is so popular. |
Which of the following is NOT true regarding cash payback analysis?
| The shorter the payback period, the better the investment is considered to be. |
| The cash payback period is the number of years it will take the net future cash inflows to equal the original investment. |
| Cash payback is considered relatively simple to calculate. |
| Table D is used to determine the present value of expected future cash inflows. |
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