SAP C_THR84_2105 Q&A - in .pdf

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NEW QUESTION: 1
Which one or the following statements about the payback method of investment analysis is correct? The
payback method:
A. Is rarely used in practice.
B. Generally leads to the same decision as other methods for long-term projects.
C. Does not consider the time value of money.
D. Uses discounted cash flow techniques.
Answer: C
Explanation:
Choice "a" is correct. The payback method does not consider the time value of money.
Choice "b" is incorrect. The payback method does not use discounted cash flow techniques. The time
value of money is ignored.
Choice "c" is incorrect. The payback method may or may not lead to the same decision as other methods
for long-term projects.
Choice "d" is incorrect. The payback method is frequently used in practice because of its simplicity.

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