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Is estimated using the Capital Asset Pricing Model (CAPM).
Question 10. Question : Which one of the following is an
advantage of the payback
method?
Student Answer:
It provides a (rough) measure of risk.
It is linearly related to the net present value (NPV) of a
proposed project.
It considers all possible future cash flows.
It applies conventional discounting procedures to anticipated
future cash flows.
It allows managers to choose between competing projects with
different useful lives.
UNIT 4 QUIZ
Question 11. Question : When evaluating capital budgeting
decision models, the payback
period emphasizes:
Student Answer:
Liquidity.
Profitability.