Which of the following is true regarding the payback method: 18 8 01:02:53 a. When a company is 'cash poor', a project with a short payback period but a low rate of return may be preferable to a project with a long payback period and a high rate of return b. The computation of the payback period is the project's initial investment divided by the present value of its net cash flows. c. A payback period of 35 means a company will earn 35 times its initial investment, d. The payback period increases as the cost of capital increases

b. The computation of the payback period is the project's initial investment divided by the present value of its net cash flows.

Explanation:

Payback calculates the amount of time it takes to recover the amount invested in a project from it cumulative cash flows

Payback period = Amount invested / cash flow

Discounted payback calculates the amount of time it takes to recover the amount invested in a project from it cumulative discounted cash flows

payback period decreases as cost of capital increases

A payback period of 35 means a company will recover the amount invested in a project in 35 years

answer; balance sheets;