Which of the Following Is Not a Characteristic of the Payback

question 109

Multiple Choice

Which of the following is not a characteristic of the payback method for making capital budgeting decisions?

• A) It is easy to calculate and comprehend.
• B) It focuses primarily on liquidity, rather than profitability, of an investment project.
• C) It can be considered a rough measure of risk.
• D) It considers returns over the entire life of the project.
• E) It requires estimates of after-tax cash inflows and after-tax cash outflows.

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