Why Is the Payback Period Often Criticized

question 27

Multiple Choice

Why is the payback period often criticized?

• A)It requires trial and error to determine the quantitative amount on which to make a decision.
• B)It ignores the cash flows after the end of the payback period.
• C)It requires the estimate of a hurdle rate that is subject to uncertain economic effects.
• D)It is based on accounting income, which most likely differs from the actual cash flows.

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Definitions:

Attention-Deficit/Hyperactivity Disorder

A neurodevelopmental disorder characterized by patterns of inattention and/or hyperactive-impulsive behavior that interfere with functioning or development.

Symptoms

Physical or psychological signs indicating the presence of a condition or disease.

Diagnosis

The process of identifying a disease, condition, or injury from its signs and symptoms by a health professional.

DSM-5 Category

A classification found within the Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition, which is used by healthcare professionals to diagnose and classify mental disorders.