The amount of time needed to recoup one's initial investment is referred to as the payback period, and it is also the amount of time required for an investor to reach the point when they are no longer losing money. Investments with shorter payback periods are considered more desirable, whereas those with longer payback periods are seen as less desirable. Imagine that you are the Chief Financial Officer. Critically evaluate the use of cash payback method (advantages and disadvantgaes) in determining the investment decisions with sufficient cash flow to ensure business sustainability in a competitive environment.

The amount of time needed to recoup one's initial investment is referred to as the payback period, and it is also the amount of time required for an investor to reach the point when they are no longer losing money. Investments with shorter payback periods are considered more desirable, whereas those with longer payback periods are seen as less desirable. Imagine that you are the Chief Financial Officer. Critically evaluate the use of cash payback method (advantages and disadvantgaes) in determining the investment decisions with sufficient cash flow to ensure business sustainability in a competitive environment.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 16MC: When using the NPV method for a particular investment decision, if the present value of all cash...

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When using the NPV method for a particular investment decision, if the present value of all cash Inflows Is greater than the present value of all cash outflows, then _______ . A. the discount rate used was too high B. the investment provides an actual rate of return greater than the discount rate C. the investment provides an actual rate of return equal to the discount rate D. the discount rate is too low
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