What Is the Major Limitation of Using the Payback Period

question 4

Multiple Choice

What is the major limitation of using the payback period as a tool in capital budgeting?

• A) It is difficult to calculate without a computer.
• B) It favors large investments.
• C) It ignores the time value of money.
• D) It does not consider cash flows.

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Definitions:

Vertebral Column

The flexible and strong sequence of bones extending from the skull to the small of the back, protecting the spinal cord and enabling upright posture.

Axial

Relating to, or situated around, an axis; often describes body parts or anatomical structures aligned with the central axis of the body.

Occipital Bone

The bone that forms the back and base of the skull, and through which the spinal cord passes.

Sphenoid Bone

A complex bone at the base of the skull, which helps form the eye socket, the floors of the cranium, and the sides of the skull.