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Question 1
Question
What is the definition of payback?
Answer
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The length of time before the cumulated stream of forecasted cash flows equals the intitial investment
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returning money to the person you are in debt to
Question 2
Question
When do you accept a project?
Answer
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When the project's payback period is > than the threshold
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When the project's payback period is
Question 3
Question
What are the drawbacks of the payback method?
Answer
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It makes no allowance for the time value of money
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The payback period doesn't state a specific date to pay by
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Receipts beyond the payback period are ignored
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It is quick and easy
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It is better than the NPV method
Question 4
Question
What is meant by the term discounted payback?
Answer
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Future cash flows are calculated after the payback period is determined
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Future cash flows are discounted prior to calculating the payback period
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