The cash multiple does not depend on the amount of time it takes to receive the cash,nor does it account for the risk of the investment.It is therefore useful only for comparing deals
A) with different time horizons and different risk levels.
B) with similar time horizons and different risk levels.
C) with similar time horizons and similar risk levels.
D) with different time horizons and similar risk levels.

Question

Quizplus · Accepted Answer

The cash multiple is a simple ratio that compares the total cash received from an investment to the initial investment made. It only takes into account the total amount of cash received and does not consider the time it takes to receive it or the risk associated with the investment. Therefore, it is most useful for comparing deals with similar time horizons and risk levels. Option C (with similar time horizons and similar risk levels) is the best choice.

The Cash Multiple Does Not Depend on the Amount of Time