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Author Question: Which of the following statements is correct? Assume that the project being considered has normal ... (Read 7 times)

connormoss

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Which of the following statements is correct? Assume that the project being considered has normal cash flows, with one outflow followed by a series of inflows.

One drawback of the payback criterion for evaluating projects is that this method does not properly account for the time value of money.


The shorter a project’s payback period, the less desirable the project is normally considered to be by this criterion.


If a project’s payback is positive, then the project should be rejected because it must have a zero NPV.


If a company uses the same payback requirement to evaluate all projects, say it requires a payback of 5 years or less, then the company will tend to reject projects with relatively short lives and accept long-lived projects, and this will cause its risk to increase over time.



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Marked as best answer by connormoss on Aug 7, 2023

LynellDool

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    • i thought about discounts
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When you can make use of a promotion on an already discounted object, all of the greater. why not find out more



connormoss

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Reply 2 on: Aug 7, 2023
Gracias!


laurnthompson

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Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

 

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