Which of the Following Is a Reason for Firms Not

question 76

Multiple Choice

Which of the following is a reason for firms not using the payback method as a guideline in capital investment decisions?

• A)It gives an explicit consideration to the timing of cash flows.
• B)The optimal payback period cannot be specified in light of the wealth maximization goal.
• C)It is a measure of risk exposure and projects the possibility of a calamity.
• D)It is easy to calculate and has intuitive appeal.

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