Truly disadvantages of the regular payback method

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1. Four of the following statements are truly disadvantages of the regular payback method, but one is not a disadvantage of this method. Which one is NOT a disadvantage of the payback method?

a. Ignores cash flows beyond the payback period.

b. Does not directly account for the time value of money.

c. Does not provide any indication regarding a project’s liquidity or risk.

d. Lacks an objective, market-determined benchmark for making decisions.

e. Does not take account of differences in size among projects.

2. Barry Company is considering a project that has the following cash flow and WACC data. What is the project's NPV? Note that a project's projected NPV can be negative, in which case it will be rejected. WACC: 11.75% Year 0 1 2 3 4 5 Cash flows -$1,100 $400 $390 $380 $370 $360

a. 0$286.36 b. 0$294.95 c. 0$349.36 d. 0$355.08 e. 0$309.27

Reference no: EM132038850

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