Solved: Potential flaws with the regular payback method, Finance Basics

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Potential flaws with the regular payback method

Question 1: What are the three potential flaws with the regular payback method? Does the discounted payback method correct all three flaws? Explain.

Question 2: Why is the NPV of a relatively long-term project (one for which a high percentage of its cash flows occurs in the distant future) more sensitive to changes in WACC than that of a short-term project?

Question 3: What is a mutually exclusive project? How should managers rank mutually exclusive projects?

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Finance Basics: Potential flaws with the regular payback method

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Finance Basics: Potential flaws with the regular payback method

Reference No:- TGS01803148

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