The payback method for the measurement of return on investment___________________?
Correct answer: C. Does not measure the discounted rate of return
- A. Gives a correct picture of profitability
- B. Underemphasises liquidity
- C. Does not measure the discounted rate of return
- D. Takes into account the cash inflows after the recovery of investments
Explanation
The simple payback period measures how quickly the initial investment is recovered, but it ignores the time value of money and does not determine a discounted rate of return. It also ignores cash flows received after payback.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? support@testustad.com
Practise Plant Design and Economics
803 free Plant Design and Economics MCQs from Chemical Engineering, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Exams that ask Chemical Engineering questions like this
Chemical Engineering is on this paper prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for it.
More Plant Design and Economics questions
_________________ of depreciation calculation accounts for the interest on investment?
Nominal and effective interest rates are equal, when the interest is compounded______________?
An investment of Rs. 1000 is carrying an interest of 10% compounded quarterly. The value of the investment at the end of five years will be ________________?
Manufacturing cost in a chemical company does not include the____________________?
Functional depreciation of an equipment is the measure of decrease in its value due to its _________________?
Depreciation is ____________________ in profit with time?