The Major Weakness of the Payback Period in Evaluating Projects

question 109

True/False

The major weakness of the payback period in evaluating projects is that it cannot specify the appropriate payback period in light of the wealth maximization goal.

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Definitions:

Possesses

The act of having physical control or ownership of something, indicating a legal relationship between a person and the object being possessed.

Negotiability

The characteristic of a financial instrument that allows it to be transferred or assigned from one party to another, ensuring the receiving party obtains a good title.

Negotiable Instrument

A written order or unconditional promise to pay a fixed sum of money that is transferable from one party to another.

Movability

The quality of a negotiable instrument that ensures it is mobile and available.