Refer to the table below,which shows the results of payback,net present value,and internal rate of return analysis of four projects.Which is preferred by the payback criterion?
A)Project A
B)Project B
C)Project C
D)Project D

Question

Refer to the table below,which shows the results of payback,net present value,and internal rate of return analysis of four projects.Which is preferred by the payback criterion? 
A)Project A 
B)Project B 
C)Project C 
D)Project D

Quizplus · Accepted Answer

According to the payback criterion, the preferred project is the one with the shortest payback period. Project A has the shortest payback period of 2 years, compared to the other projects which have payback periods of 3 or 4 years. However, it is important to note that the payback criterion does not take into account the time value of money and future cash flows beyond the payback period. Therefore, it is recommended to consider other criteria such as net present value and internal rate of return to make a more informed decision.

Refer to the Table Below,which Shows the Results of Payback,net