Which of the Following Is NOT a Limitation of the Payback

question 40

Multiple Choice

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

• A) It does not account for the time value of money.
• B) It is difficult to calculate.
• C) It ignores cash flows after payback.
• D) It does not account for changes in the discount rate.

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Definitions:

Preferred Shareholders

Holders of preferred shares who may have a right to vote arising if dividends are not paid.

Dividends

Payments made by a corporation to its shareholders from profits, usually on a regular basis.

Vote

A formal indication of choice between options, typically in elections or other decision-making processes.

Lifting

The act or process of physically raising or elevating something.