nadz_k
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Financial Management Quiz on Payback, created by nadz_k on 04/05/2013.

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nadz_k
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Payback

Payback

Question 1 of 4

1

What is the definition of payback?

Select one of the following:

  • The length of time before the cumulated stream of forecasted cash flows equals the intitial investment

  • returning money to the person you are in debt to

Explanation

Question 2 of 4

1

When do you accept a project?

Select one of the following:

  • When the project's payback period is > than the threshold

  • When the project's payback period is

Explanation

Question 3 of 4

1

What are the drawbacks of the payback method?

Select one or more of the following:

  • It makes no allowance for the time value of money

  • The payback period doesn't state a specific date to pay by

  • Receipts beyond the payback period are ignored

  • It is quick and easy

  • It is better than the NPV method

Explanation

Question 4 of 4

1

What is meant by the term discounted payback?

Select one of the following:

  • Future cash flows are calculated after the payback period is determined

  • Future cash flows are discounted prior to calculating the payback period

Explanation

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