This technique for evaluating capital projects is particularly useful when firms face time constraints in repaying investors.
A) payback
B) internal rate of return.
C) net present value
D) profitability index

Question

Quizplus · Accepted Answer

Payback method is a technique used to evaluate capital projects based on how long it takes to recover the initial investment. It is particularly useful when firms face time constraints in repaying investors, as it provides a quick way to assess the feasibility of a project. Other techniques like net present value and internal rate of return can provide more detailed insights into the profitability of a project, but they may require more time and resources to calculate. Therefore, the payback method is the best choice when time is of the essence.

This Technique for Evaluating Capital Projects Is Particularly Useful When