The payback period rule:
A)discounts cash ﬂows.
B)ignores initial cost.
C)always uses all possible cash ﬂows in its calculation.
D)discounts cash ﬂows, but does not ignore initial cost.
E)None of the above.

Question

Quizplus · Accepted Answer

The payback period rule does not discount cash flows; it considers the initial cost to determine how long it takes to recover the investment from its cash flows, and it does not always use all possible cash flows in its calculation, as it stops once the initial investment is recovered.

The Payback Period Rule