Leave the strength standing

Exercise and reference answers

Questions

1. Question

   Eliminate the shortcomings of the payback period method.

   Choices

   1. Item

      It is simple to calculate

      Correct

      Yes

   2. Explanation

      That is named as the first shortcoming of the method.

      Item

      It ignores the time value of money

   3. Explanation

      That is named as a second disadvantage of the method.

      Item

      It has no clear accept or reject rule

   4. Explanation

      That is named as a third drawback of the method.

      Item

      It ignores cash flows after payback

Instructions

Knock out the shortcomings. One real advantage should survive.

Explanation