Requires an estimate of the yield-to-maturity for long-term bonds . Is equal to the pretax cost of debt times t , where t = income tax rate . Is equal to the pretax cost of debt ÷ ( 1 - t ), where t = income tax rate . Is approximated by the firm ' s short-term borrowing rate . 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
Requires an estimate of the yield-to-maturity for long-term bonds . Is equal to the pretax cost of debt times t , where t = income tax rate . Is equal to the pretax cost of debt ÷ ( 1 - t ), where t = income tax rate . Is approximated by the firm ' s short-term borrowing rate . 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