Which of the Following Is a Limitation of the Payback

question 56

Multiple Choice

Which of the following is a limitation of the payback period?

• A)This method includes an internal rate of return that is usually less than the required rate of return.
• B)The cash flows after the payback period needed for the calculation are not easy to estimate.
• C)This method ignores the time value of money.
• D)The discount rate used in the calculation often changes.

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Definitions:

Right to Sue

The legal right of an individual or entity to bring a lawsuit against another party in a court of law.

Unilateral Contract

A contract where one party makes a promise in exchange for an act by another party.

Bilateral Contract

An agreement involving two parties where each side has made a promise to the other.

Quasi-Contract

An obligation imposed by law in the absence of a formal contract to prevent unjust enrichment.