Consider the following statements concerning the payback method of investment appraisal. 1. It completely ignores the timing of future cash flows. 2. It requires managers to determine an appropriate payback period. Which of these statements is/are correct?

Consider the following statements concerning the payback method of investment appraisal. 1. It completely ignores the timing of future cash flows. 2. It requires managers to determine an appropriate payback period. Which of these statements is/are correct?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 20E

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Question

Consider the following statements concerning the payback method of investment appraisal:
1. It completely ignores the timing of future cash flows.
2. It requires managers to determine an appropriate payback period.
Which of these statements is/are correct?
A. 1 only
B. Neither 1 nor 2
C. 1 and 2
D. 2 only

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