1. Which of these is a disadvantage of using the payback period as a capital budgeting tool?
It does not allow for an easy comparison across investments
It requires the calculation of different cash flows than NPV and IRR
The calculations are more complex and more difficult to explain to managers untrained in finance
This method does not take into account the time value of money
2. Which of the following is a reason net income can differ from cash flows?
Dividends are not included in net income
Selling equipment for no profit doesn’t involve cash
Depreciation is not included in net income
Earnings from bank deposits are not included in net income