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.

Question

Quizplus · Accepted Answer

The payback rule is easy to calculate as it involves determining the time it takes to recover the initial investment. Its limitations are that it does not account for the time value of money, lacks an economic basis, and ignores cash flows occurring beyond the payback period.

Which of the Following Is NOT a Limitation of the Payback