CFA CFA Level 1 Question of the Week – Corporate Finance

Question of the Week – Corporate Finance

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    • AdaptPrep
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      The payback period approach is inappropriate for all but which of the following reasons?

      • Time value of money is ignored.
      • Cash flows after the payback period are ignored.
      • The payback approach will always endorse the wrong project.
    • policedog
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      inappropriate for all but which of the following reasons” – was well confused by that one!

    • Maverick
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      I’m with you on that one mate. Had to read it 3 times before I went with an answer.

    • malkadhi
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      Ah crap, reading critically is key!! 

    • hairyfairy
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      I like questions like these. Question wording is equally tricky no matter what the levels so always good to have a bit of practice on this.

    • AdaptPrep
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      The payback period often does support the best
      project. The metric is flawed for the other two reasons (and more), so it doesn’t always give the best results.

    • shannondaily
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      Boo! I got it wrong. :neutral_face: 

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