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The Payback Period Is Deficient as a Decision Criterion for Capital

Question 86

Multiple Choice

The payback period is deficient as a decision criterion for capital projects because it:
I. Disregards relative profitability
II. Ignores income beyond the payback period
III. Does not take into account the time value of money


A) I only
B) II only
C) III only
D) I, II, and III

Correct Answer:

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