The Following Are Disadvantages of Using the Payback Rule Except

question 62

Multiple Choice

The following are disadvantages of using the payback rule except:

• A) The payback rule ignores all cash flow after the cutoff date
• B) The payback rule does not use the time value of money
• C) The payback period is easy to calculate and use
• D) The payback rule does not have the value additive property

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Definitions:

Per Se Rule

Legal doctrine stating that an action or condition is inherently illegal or violates a law in itself, without the need for additional proof.

Rule-Of-Reason Standard

A legal principle used in antitrust law to determine if a business practice is anticompetitive, weighing its pro-competitive benefits against its anti-competitive effects.

Poison Pill Defense

A strategy used by companies to prevent or deter hostile takeovers by making the target company less attractive to the acquirer.

Greenmail Arrangement

A situation where a company buys back its own shares from a potential acquirer at a higher price to avoid a takeover attempt.