Suppose a firm relies exclusively on the payback method

Assignment Help Accounting Basics
Reference no: EM13607692

Suppose a firm relies exclusively on the payback method when making capital budgeting decisions, and it sets a 4-year payback regardless of economic conditions. Other things held constant, which of the following statements is most likely to be true?

a. It will accept too many short-term projects and reject too many long-term projects (as judged by the NPV).

b. It will accept too many long-term projects and reject too many short-term projects (as judged by the NPV).

c. The firm will accept too many projects in all economic states because a 4-year payback is too low.

d. The firm will accept too few projects in all economic states because a 4-year payback is too high.

e. If the 4-year payback results in accepting just the right set of projects under average economic conditions, then this payback will result in too few long-term projects when the economy is weak.

Reference no: EM13607692

Questions Cloud

At what point along the line connecting the two charges is : two particles having charges of 0.510 nc and 18.4 nc are separated by a distance of 1.30m .a at what point along the
The heat load on the refrigerator heat leaking through : a thermoelectric device cools a small refrigerator and discards heat to the surroundings at 25c. the maximum electric
Define standard treatment protocols define required : you increased rates by 10 percent across all services and profits decreased by 5 percent. cost per unit remained
An object is 30cm in front of a converging lens with a : an object is 30cm in front of a converging lens with a focal length of 10cm . a use ray tracing to determine the
Suppose a firm relies exclusively on the payback method : suppose a firm relies exclusively on the payback method when making capital budgeting decisions and it sets a 4-year
Find the focal length of the lens that produces the image : consider an object with s12cm that produces an image with s115cm. note that whenever you are working with a physical
The economist determined the covariance to be -267 the help : an economist wants to know whether these two variables the help wanted index and the unemployment rate among insured
Probability you will win 40 times what is the most likely : you win a game if you roll a die and get a 2 or a 5. you play this game 60 times.a what is the probability that you win
Unified parcel inc operates a local parcel delivery service : unified parcel inc. operates a local parcel delivery service. the company keeps detailed records relating to operating

Reviews

Write a Review

Accounting Basics Questions & Answers

  Which method is generally accepted

Which method is generally accepted? Why do you think this method is generally accepted? Explain your position.

  Audit functions in your organization

Relate your explanation to the audit functions in your organization, or an organization with which you are familiar.

  As the company is preparing its schedule of cash

mimosa company is putting together its budget for the first half of the coming year. based on its history the company

  Identify the important structural cost drivers for company

Identify the important structural cost drivers for the company and the related strategic issues that it should address to be competitive.

  Classify the cash flows from given transactions

Classify the cash flows from these transactions as operating activities (OA), investing activities (IA), or financing activities (FA). Use NA for transactions that do not affect the statement of cash flows.

  Last month widner corporation generated sales of 800000 and

last month widner corporation generated sales of 800000 and incurred selling and administrative expenses of 320000 half

  Isabel a calendar-year taxpayer uses cash method of

isabel a calendar-year taxpayer uses cash method of accounting for her sole proprietorship. in late december she

  Problem regarding cost of goods sold

Cost of goods sold for 2010 was $3,600,000. If Butler Company had used FIFO during 2010, its cost of goods sold for 2010 would have been ??

  Stu corporation is authorized to issue 500000 shares of

1. stu corporation is authorized to issue 500000 shares of 12.00 par value common stock. as of december 2012 stus

  Identify and explain the deficiencies in the statement

you recently joined the internal auditing department of marcus clothing corporation. as one of your first assignments

  Total stockholders equity

total stockholders equity representsa.a claim to specific assets contributed by the owners.b.the maximum amount that

  Journal entry to record accrued interest

The journal entry to record accrued interest on a short-term note payable must include an increase to:

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd