Question

gone advantage of the pay back method for evaluating potential investments is that it prevides information about a projects liquidity and risk The / false Suppose Walther Publishing Company is considering bringra out a new finance text whose projectes revenues include some revenues that will be taken away from another out walkers books. the last sates on the older baw are a sunk cast and as such should not be considered In the analysis for the new book. There / false

Answer 1

TRUE, Payback period measures the time period in which the initial investment will be recovered i.e. it focuses on liquidity and risk as cash flows generated later in future have higher risk

FALSE, lost revenues are the opportunity cost and should be included in the analysis

FALSE. IRR is the rate at which NPV = 0

i.e. It Equated PRESENT VALUE OF INFLOWS WITH PRESENT VALUE OF OUTFLOWS