Answer the following statements true (T) or false (F)
1. The payback method is a screening device and is rarely used as the sole method for deciding whether to invest in an asset.
2. All else being equal, investments with longer payback periods are preferable.
3. Cash inflows from a capital investment arise from an increase in revenues, a decrease in expenses, or both.
4. A major criticism of the payback method is that it focuses only on the time to recover the investment and ignores profitability.
5. The payback method considers cash flows that occur both during and after the payback period.
1. TRUE
2. FALSE
3. TRUE
4. TRUE
5. FALSE
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