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

Question

Quizplus · Accepted Answer

The payback period is deficient because it disregards relative profitability (I), ignores income beyond the payback period (II), and does not take into account the time value of money (III).

The Payback Period Is Deficient as a Decision Criterion for Capital