Which of the Following Is NOT a Limitation of the Payback

question 113

Multiple Choice

Which of the following is NOT a limitation of the payback rule?

• A)It does not consider cash flows occurring after the payback period.
• B)It is difficult to calculate.
• C)It does not consider the time value of money.
• D)It lacks a decision criterion that is economically based.

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Definitions:

AVC Curve

Stands for Average Variable Cost curve, illustrating the average variable costs of production at different output levels.

ATC Curve

Average Total Cost Curve, a graphical representation showing how the average cost of producing one unit of goods changes with the level of production.

Average Fixed Cost

Average Fixed Cost is the fixed expenses of a company divided by the number of units produced, decreasing as production increases.

Marginal Product

The extra output or benefit received from using one more unit of a variable input.