1.) Which of the following is TRUE about payback period analysis? If a project w

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Question

1.) Which of the following is TRUE about payback period analysis?

If a project will payback in the project life, then it must be a positive NPV project.

Making investment decision based on payback period will never incorrectly accept a project with negative NPV.

There are well established theories as to how to set the required payback period.

Payback period analysis takes into account time value of money.

Using payback period to make investment decision may incorrectly reject a project with positive NPV.

2.) Which of the following is TRUE about discounted payback period analysis?

Making investment decision based on discounted payback period will never incorrectly reject a project with positive NPV.

Making investment decision based on discounted payback period will never incorrectly accept a project with negative NPV.

Making investment decision based on discounted payback period tends to bias against liquidity projects.

It is possible for a project to have negative NPV and still payback on a discounted basis in the project life.

The calculation of discounted payback period does not require the required rate of return.

If a project will payback in the project life, then it must be a positive NPV project.

Making investment decision based on payback period will never incorrectly accept a project with negative NPV.

There are well established theories as to how to set the required payback period.

Payback period analysis takes into account time value of money.

Using payback period to make investment decision may incorrectly reject a project with positive NPV.

1.Following statment is true about payback period analysis ,

Using payback period to make investment decision may incorrectly reject a project with positive NPV.

2.Following statment is true about discounted payback period analysis ,

It is possible for a project to have negative NPV and still payback on a discounted basis in the project life.

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