Post Utme Babcock University 2023 Economics Question 9

Practice objective / multiple choice question 9 from the 2023 Post Utme Babcock University Economics examination.

Post Utme Babcock University 2023 Economics Objective / Multiple Choice
Question 9 POST_UTME_BABCOCK_UNIVERSITY • 2023 • ECONOMICS • objective

A firm is considering investing in a new project that has a payback period of 5 years. However, the firm's \cost of capital is 10% per annum. U\sing the concept of payback period, explain why the firm should or should not invest in the project.

Answer Options

A. The firm should invest in the project because the payback period is less than the \cost of capital.
Correct Answer B. The firm should not invest in the project because the payback period is greater than the \cost of capital.
C. The firm should invest in the project because the payback period is equal to the \cost of capital.
D. The firm should not invest in the project because the payback period is less than the \cost of capital.
Correct Answer
B
Correct Option:
The firm should not invest in the project because the payback period is greater than the \cost of capital.

About This Question

This is Post Utme Babcock University 2023 Economics Question 9. It is one of the objective questions from the 2023 Post Utme Babcock University Economics examination.

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