Which of the Following Statements Is True of the Payback

question 56

Multiple Choice

Which of the following statements is true of the payback period method of capital budgeting?

• A) It is the simplest and oldest formal model to evaluate capital budgeting projects.
• B) It directly accounts for the time value of money.
• C) It considers the discounted value of cash flows beyond the payback period.
• D) It always results in maximizing the value of the firm.
• E) It incorporates risk into the discount rate used to solve the payback period.

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