The payback rule can be best stated as:
A) An investment is acceptable if its calculated payback period is less than some pre-specified number of years.
B) An investment should be accepted if the payback is positive and rejected if it is negative.
C) An investment should be rejected if the payback is positive and accepted if it is negative.
D) An investment is acceptable if its calculated payback period is greater than some pre-specified number of years.
E) An investment is acceptable if its calculated payback period is equal to its deprecation useful life.

Question

Quizplus · Accepted Answer

The payback rule states that an investment is considered acceptable if the period it takes to recover the initial investment is less than a predetermined number of years. This rule focuses on the time it takes for cash inflows to repay the initial investment cost.

The Payback Rule Can Be Best Stated As