The payback period of an investment is defined as: (Points : 1) the number of years required for cumulative profits from a project to equal the…

a period of time sufficient to earn a rate of return equal to the firm’s cost of capital. none of the above none of the above the analyst should compute the project’s net present value and accept the project if its NPV is greater than $0 the market capitalization rate none of the above none of the above output expansion 19% 3.3 years none of the above are correct $167,196 Neither I nor II Neither a nor b is correct. The time value of money B, $902 A, $280 groups projects into risk classes and evaluates all projects in a particular risk class at the same risk- adjusted discount rate smaller, smaller the firm is unlevered net cash flows, denominator certainty equivalent objectively and by using regression analysis 19.9% 12.81% -$352,800 Because it recognizes the riskiness of various projects, it can develop multiple outcomes. simulation analysis computer spreadsheets financial risk divisional capital structure dividends are increased leasing companies all of these answers are correct the weighted cost of capital The cost of equity capital cannot be determined by using the CAPM, the risk premium on debt approach, or by estimating ke for comparable dividend-paying stocks in their industry. zero 13.0% 11.8% Neither I nor II 12% Price/Earnings ratio 5.76% 10.87% the firm’s growth rate of dividends