Asked by
Ashley Lozano
on Dec 09, 2024Verified
The payback method assumes that the cash flows:
A) Are an annuity stream.
B) Occur evenly throughout the year.
C) Occur at the end of the year.
D) Are discounted at the IRR rate.
E) Are calculated with the consideration of the time value of money.
Payback Method
A capital budgeting technique that calculates the amount of time required to recoup the original investment.
Cash Flows
The total incoming and outgoing monetary flow in a commerce, influencing its immediate financial capabilities.
Annuity Stream
A series of fixed payments made at equal intervals over a specified period of time.
- Understand the limitations and applications of the payback period method in capital budgeting.
Verified Answer
NS
Learning Objectives
- Understand the limitations and applications of the payback period method in capital budgeting.
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