A disadvantage of the payback statistic is that:Group of answer choicesit does not reflect...
A disadvantage of the payback statistic is that:
Group of answer choices
it does not reflect the time value of money.
the accept/reject criteria is arbitrary.
it does not consider cash flows beyond the payback period.
All of the options are disadvantages of payback.
Homework Answers
Disadvantages of Payback period.
It does not reflect the time value of Money. (present value is not computed in Normal Payback method)
It does not consider cash flows beyond the Payback Period.
The accept/reject criteria for Payback statistic is arbitrary. (however the criteria for NPV and IRR methods are not arbitrary)
So, All of the options are Disadvantages of Payback.
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A disadvantage of the payback statistic is that:Group of answer choicesit does not reflect...
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Along with the questions, is the first one shorter or longer? A project's payback period (PB)...
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A project's payback period (PB) indicates the number of years required for a project to recover its initial investment using its operating cash flows. As the theoretical soundness of the conventional (undiscounted) PB technique was criticized, the model was modified to incorporate the time value of money-adjusted operating cash flows to create the discounted payback method. While both payback models continue to reflect faulty ranking criteria, they do provide...
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Answer
in full please
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6. The payback period The payback method helps firms establish and identify a maximum acceptable payback...
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Which version of a project's payback period should the CFO use when evaluating Project Beta, given its theoretical superiority? O The regular payback period O The discounted payback period One theoretical disadvantage of both payback methods-compared to the net present value method-is that they fail to consider the value of the cash flows beyond the point in time equal to the payback period How much value in this example does the discounted payback period method fail to recognize due to...
Along with the questions, is
the first one shorter or longer?
A project's payback period (PB) indicates the number of years required for a project to recover its initial investment using its operating cash flows. As the theoretical soundness of the conventional (undiscounted) PB technique was criticized, the model was modified to incorporate the time value of money-adjusted operating cash flows to create the discounted payback method. While both payback models continue to reflect faulty ranking criteria, they do provide...
5. The NPV and payback period Aa Aa What information does the payback period provide? Suppose you are evaluating a project with the expected future cash inflows shown in the following table. Your boss has asked you to calculate the project's net present value (NPV). You don't know the project's initial cost, but you do know the project's regular, or conventional, payback period is 2.50 years. If the project's weighted average cost of capital (WACC) is 790, the project's NPV...
Answer
in full please
6. The payback period The payback method helps firms establish and identify a maximum acceptable payback period that helps in their capital budgeting decisions. Consider the case of Cute Camel Woodcraft Company: Cute Camel Woodcraft Company is a small firm, and several of its managers are worried about how soon the firm will be able to recover its initial investment from Project Delta's expected future cash flows. To answer this question, Cute Camel's CFO has asked...
6. The payback period The payback method helps firms establish and identify a maximum acceptable payback period that helps in their capital budgeting decisions. Consider the case of Green Caterpillar Garden Supplies Inc.: Green Caterpillar Garden Supplies Inc. is a small firm, and several of its managers are worried about how soon the firm will be able to recover its initial investment from Project Alpha's expected future cash flows. To answer this question, Green Caterpillar's CFO has asked that you...
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