Question

The Payback Period Rule states that a company will accept a project if: Multiple Choice The calculated payback is less than three years for all projects. The calculated payback is less than a pre-specified number of years. We can recover the costs in a reasonable amount of time. The project stays within budget. The project increases shareholder value

Answer 1

Answer:

The calculated payback is less than a pre-specified number of years.

Explanation:

Project management can be defined as the process of designing, planning, developing, leading and execution of a project plan or activities using a set of skills, tools, knowledge, techniques and experience to achieve the set goals and objectives of creating a unique product or service.

Generally, projects are considered to be temporary because they usually have a start-time and an end-time to complete, execute or implement the project plan.

The net present value (NPV) of a project can be defined as the difference between present value of cash-inflow into a project and that of cash-outflow over a specific period of time. Thus, it is simply the value of all cash-flows for a project with respect to its life span.

The Payback Period Rule states that a company will accept a project if the calculated payback is less than a pre-specified number of years.

Additionally, investors and project managers are advised to only invest in projects that are having a positive net present value that is greater than or equal to zero.