If a firm is more concerned about the quick return of its initial investment than it is about the amount of value created,then the firm is most apt to evaluate a capital project using the ________ method of analysis.
A)internal rate of return
B)net present value
C)modified internal rate of return
D)payback
E)profitability index

Question

Quizplus · Accepted Answer

The payback method calculates the amount of time it takes for a project to generate enough cash flow to cover the initial investment. If a firm is more concerned about quick return of its investment than the amount of value created, then the payback method would be the most appropriate analysis method as it focuses on how long it will take to recoup the initial investment rather than the overall value generated by the project.

If a Firm Is More Concerned About the Quick Return