Which of the following is true of the cash payback period?
Options
A) The longer the payback, the longer the estimated life of the asset.
B) The longer the payback, the sooner the cash spent on the investment is recovered.
C) The shorter the payback, the less likely the possibility of obsolescence.
D) All of these choices are correct.
The Correct Answer for the given question is Option C) The shorter the payback, the less likely the possibility of obsolescence.
Answer Explanation
The true statement about cash payback period is The shorter the payback, the less likely the possibility of obsolescence. A payback period is the length of time it takes for an investment to break even. The main reason people and corporations invest their money is to get paid back, which is why the payback period is so important. A shorter payback period makes an investment more appealing. An investment with a shorter payback period is considered to be better, since the investor’s initial outlay is at risk for a shorter period of time. Thus, using and undertaking projects with short payback period helps in reducing the chances of a loss through obsolescence.
MBA,BBA.
I am Smirti Bam, an enthusiastic edu blogger with a passion for sharing insights into the dynamic world of business and management through this website.
I hold a MBA degree from Presidential Business School, Kathmandu, and a BBA degree with a specialization in Finance from Apex College,
- As part of the consent process, the federal regulations require researchers to: - September 8, 2024
- Concept and Nature of Intellectual Property Rights – Explained in Detail | Business Law - January 30, 2024
- Management Information Systems Online Degree – Courses, Colleges, and Careers in MIS - January 16, 2024