If a firm uses the _____________ as an investment criterion, one of the risks it takes is that it may ignore some future cash flows.
A) AAR
B) NPV
C) IRR
D) Profitability. index
E) Payback rule

Question

Quizplus · Accepted Answer

The Payback rule focuses on how quickly an investment can return its initial cost, often ignoring any cash flows that occur after the payback period. This can lead to overlooking potentially profitable investments that have longer-term benefits.

If a Firm Uses the _____________ as an Investment Criterion