Which of the following statement about the payback period method for capital budgeting decisions is not correct? The payback period method ignores the time value of money. A shorter payback period does not always mean that one investment is more desirable than another. When the annual net cash inflow is the same each year, the payback period = Investment required/Annual net cash inflow. When the net cash flows change from year to year, the payback period = Investment required/Average net cash inflow per year.
Which of the following statement about the payback period method for capital budgeting decisions is not correct? The payback period method ignores the time value of money. A shorter payback period does not always mean that one investment is more desirable than another. When the annual net cash inflow is the same each year, the payback period = Investment required/Annual net cash inflow. When the net cash flows change from year to year, the payback period = Investment required/Average net cash inflow per year.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Which of the following statement about the payback period method for capital budgeting decisions is not correct?
The payback
period method ignores the time value
of money.
A shorter payback period does not always mean that one investment is more desirable than another.
When the annual net
the same each year, the payback period = Investment required/Annual net
cash inflow.
When the net cash flows change from year to year, the payback period = Investment required/Average net
cash inflow per year.
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