The Payback Period Rule

question 44

Multiple Choice

The payback period rule:

• A)determines a cutoff point so that all projects accepted by the NPV rule will be accepted by the payback period rule.
• B)determines a cutoff point so that depreciation is just equal to positive cash flows in the payback year.
• C)requires an arbitrary choice of a cutoff point.
• D)varies the cutoff point with the interest rate.
• E)Both A and D.

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