Question: Required information LO 7 - 1 : Determine the payback period for an investment. Skip to question We will cover what capital budgeting decisions are

Required information

7 - 1

: Determine the payback period for an investment.

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We will cover what capital budgeting decisions are and the importance of time value of money in capital budgeting decisions. We will learn to determine the payback period for even and uneven cash flows. We will also discuss the limitations of using the payback period and why a company might prefer an investment with an earlier payback period even though it has a low rate of return.

Capital Budgeting and Time Value of Money

Knowledge Check

01

Which of the following is NOT one of the two broad categories of capital budgeting decisions?

multiple choice

Selection decisions

Screening decisions

Preference decisions

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