Question：Which of the following is a disadvantage of the payback method of investment appraisal?

　　A. It tends to maximise financial and business risk.

　　B. Its use will hinder liquidity.

　　C. It is a fairly complex technique and not easy to understand.

　　D. It may lead to excessive investment in short-term projects.

　　The correct answer is: It may lead to excessive investment in short-term projects.

　　Focusing on payback will lead to choosing short-term projects.

　　It tends to emphasise those projects which make a quick return.

　　Question：Monthly sales have been found to follow a linear trend of y = 9.82 + 4.372x, where y is the number of items sold and x is the number of the month. Monthly deviations from the trend have been calculated and follow an additive model. In month 24, the seasonal variation is estimated to be plus 8.5.

　　What is the forecast number of items to be sold in month 24? (to the nearest whole number.)

　　A. 123

　　B. 115

　　C. 152

　　D. 106

　　The correct answer is: 123

　　y = 9.82 + (4.372 × 24)

　　y = 114.748

　　forecast = 114.748 + 8.5

　　= 123.248

　　= 123