Acctg2020,sec 02 (9:00am), 2017 Fall Test: Exam V Chs 11 & 12 This Question: 1 p

Question

Acctg2020,sec 02 (9:00am), 2017 Fall Test: Exam V Chs 11 & 12 This Question: 1 pt 23 of 25 (0 complete) Which of the following is false with regards to the payback period O A. All else being equal, a shorter payback period is more desirable than a longer payback period. O B. The payback period is the length of time it takes to recover the initial cost ofthe capital investment. O C. The payback period gives no indication of the investments profitability O D. It is computed as follows, regardless of whether cash flows are equal or unequal: Initial investment /Expected annual net cash inflow

Explanation / Answer

THE ANSWER IS:

LAST STATEMENT IS FALSE

IF ANNUAL CASHFLOWS ARE EQUAL THAN ONLY,

THE FORMULA WILL WORK

INITIAL INVESTMENT/ EXPECTED ANNUAL NET CASH INFLOW

IF CASH FLOWS ARE NOT EQUAL THAN CUMULATIVE CASHFLOWS SHALL BE COMPUTED TO CALCULATE THE PAYBACK PERIOD.

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---