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Compared with payback, both the net present value and the internal rate of return take account of:
AThe colour of the machine
BThe size of the factory
CThe age of the manager
DThe timing of cash flows
Answer & Solution
Correct answer: D. The timing of cash flows
1. Payback treats all years alike.
2. These measures discount later rupees.
3. They account for the timing of cash flows.
_Source: OpenStax Principles of Finance 2e, Chapter 16, How Companies Think about Investing._
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