A Problem with the Payback Method Is

question 31

Multiple Choice

A problem with the payback method is:

• A) it assigns a 0 percent discount rate to cash flows that occur before the cutoff point.
• B) it assigns a 10 percent discount rate to cash flows that occur before the cutoff point.
• C) it assigns a 20 percent discount rate to cash flows that occur before the cutoff point.
• D) it assigns a 30 percent discount rate to cash flows that occur before the cutoff point.

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