A Disadvantage of Using the Payback Period to Compare Investment

question 107

Multiple Choice

A disadvantage of using the payback period to compare investment alternatives is that:

• A) It cannot be used when cash flows are not uniform.
• B) It cannot be used if a company records depreciation.
• C) It includes the time value of money.
• D) It cannot be used to compare investments with different initial investments.
• E) It ignores cash flows beyond the payback period.

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