Which of the Following Is NOT a Limitation of the Payback

question 122

Multiple Choice

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

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

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Definitions:

Premiums

Regular payments made to keep an insurance policy active and maintain coverage against risks.

Endowment Policy

A life insurance contract designed to pay a lump sum after a specific term or on death.

Life Policy

An agreement that awards a specified sum to a named beneficiary when the person covered by the policy dies.

Maximum Available

The highest amount or quantity that can be used, offered, or allocated from a particular resource or within a specific framework.