1. We use payback period as one method to determine whether of not to undertake a projects. It is a simple method that works well for small investments. It does have weaknesses which include the following EXCEPT:
a. the appropriate payback period is subjectively determined
b. it does not incorporate the time value of money
c. t does not recognize all cash flows
d. it only works with smaller costs of capital
2. You decide to sell a price of equipment for $5,000. It had been depreciated to $3,000. The original purchase price was $6,000. Your tax rate is 20%. What are your after-tax proceeds from the sale?
A. $600
B. $5,000
C. $4,600
D. $5,400
E. $400