Asked by Ogbonna Chris on Jun 04, 2024
Verified
In ranking choices with the break-even time (BET)method,the investment with the longest BET gets the lowest rank.
Break-Even Time
Break-even time is the period it takes for a business or project to become financially viable, covering all its costs and starting to generate profit.
Lowest Rank
Refers to the position, level, or grade of an entity or individual that is at the bottom of a hierarchical system.
- Grasp the risk factors associated with capital budgeting decisions and how they impact the project's selection.
- Comprehend how the break-even time (BET) method incorporates the time value of money and differs from the traditional payback period method.
Verified Answer
OS
Osama SiddiquiJun 07, 2024
Final Answer :
True
Explanation :
This is because the break-even time represents the amount of time it takes for the investment to generate enough cash inflows to cover the initial investment cost. Therefore, investments with shorter BETs are considered more desirable because they generate positive cash flows sooner.
Learning Objectives
- Grasp the risk factors associated with capital budgeting decisions and how they impact the project's selection.
- Comprehend how the break-even time (BET) method incorporates the time value of money and differs from the traditional payback period method.
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