Which one of the following statements is correct concerning the payback period?

Question

Which one of the following statements is correct concerning the payback period?

A. An investment is acceptable if its calculated payback period is less than some pre-specified period of time.

B. An investment should be accepted if the payback is positive and rejected if it is negative.

C. An investment should be rejected if the payback is positive and accepted if it is negative.

D. An investment is acceptable if its calculated payback period is greater than some pre-specified period of time.

E. An investment should be accepted any time the payback period is less than the discounted payback period, given a positive discount rate.

Which of the following is false?

A.Incremental costs can be Opportunity costs.

B.Opportunity costs can be Incremental cost.

C.Of the three categories of Opportunity costs,only one is usually an Incremental cost.

D.Opportunity costs and Incremental cost maybe discounted at different rates.

E.Some Opportunity costs are not Incremental costs.

Explanation / Answer

Which one of the following statements is correct concerning the payback period? A. An investment is acceptable if its calculated payback period is less than some pre-specified period of time. Which of the following is false? Ans) E. Some opportunity costs are not incremental costs

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