Suppose a firm relies exclusively on the payback method when making capital budgeting decisions, and it sets a 4-year payback regardless of economic conditions. Other things held constant, which of the following statements is most likely to be true? a. It will accept too many long-term projects and reject too many short-term projects (as judged by the NPV). b. The firm will accept too many projects in all economic states because a 4-year payback is too low. c. The firm will accept too few projects in all economic states because a 4-year payback is too high. d. If the 4-year payback results in accepting just the right set of projects under average economic conditions, then this payback will result in too few long-term projects when the economy is weak. e. It will accept too many short-term projects and reject too many long-term projects (as judged by the NPV).
Answers (1)
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Suppose a firm relies exclusively on the payback method when making capital budgeting decisions, and it sets a 4-year payback regardless of ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers
You Might be Interested in
The Sisyphean Company has a bond outstanding with a face value of $ 1 comma 000 $1,000 that reaches maturity in three three years. The bond certificate indicates that the stated coupon rate for this bond is 8.4 8.
Answers (1)
Sasha has run a small diner near the train station for the past ten years. Six months ago, a chain restaurant serving gourmet burgers and sandwiches opened up near him and he has had to re-think his menu.
Answers (1)
In making a forward pass through a network, activities L, M, and P are immediate predecessors for activity T, which has an activity time of 7. The early start times for activities L, M, and P are 22, 17, and 27, respectively.
Answers (1)
Why is the statistical validity of a multiple regression design more complicated to interrogate than a bivariate design? a. These designs require more participants. b. Betas and rs share no similarities. c.
Answers (1)
Tiyona Motors plans to introduce a fast, stylish car to its fleet that management hopes will appeal to high-end buyers and grant Tiyona entry into the luxury market.
Answers (2)
New Questions in Business
The balanced scorecard approach uses only financial measures to evaluate performance. uses rather vague, open statements when setting objectives in order to allow managers and employees flexibility.
Answers (1)
In the open economy of Sildavia, government spending during 2005 was $30 billion, consumption was $70 billion, taxes were $20 billion, and GDP was $100 billion.
Answers (1)
Ridiculousness, Inc., has sales of $49,000, costs of $22,600, depreciation expense of $2,150, and interest expense of $1,900. If the tax rate is 21 percent, what is the operating cash flow, or OCF?
Answers (1)
A common measure of liquidity is a. the accounts receivable turnover. b. dividends per share of common stock. c. the asset turnover ratio. d. the profit margin.
Answers (1)
Assume that Amazon has a stock-option plan for top management. Each stock option represents the right to purchase a share of Amazon $1 par value common stock in the future at a price equal to the fair value of the stock at the date of the grant.
Answers (1)