Many Firms Use the Payback Method as a Guideline in Capital

question 166

Multiple Choice

Many firms use the payback method as a guideline in capital investment decisions. Reasons they do so include all of the following EXCEPT

• A) it gives an implicit consideration to the timing of cash flows.
• B) it recognizes cash flows which occur after the payback period.
• C) it is a measure of risk exposure.
• D) it is easy to calculate.

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