An Investment Project Is Most Likely to Be Accepted by the Payback

question 1

Multiple Choice

An investment project is most likely to be accepted by the payback period rule and not accepted by the NPV rule if the project has:

• A) a large initial investment with moderate positive cash flows over a very long period of time.
• B) a very large negative cash flow at the termination of the project.
• C) most of the cash flow at the beginning of the project.
• D) All projects approved by the payback period rule will be accepted by the NPV rule.
• E) The payback period rule and the NPV rule cannot be used to evaluate the same type of projects.

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