When using the payback method to determine economic feasibility of projects,the company usually accepts the project with the
A) longest payback period.
B) mid-range payback period.
C) payback period that is equal to the project's economic life.
D) shortest payback period.

Question

Quizplus · Accepted Answer

The payback period is the amount of time it takes for a project to recover its initial investment. The shorter the payback period, the quicker the project can start generating positive cash flows. Therefore, the best choice when using the payback method is to accept the project with the shortest payback period, as it minimizes the risk of losing investment capital and provides the fastest return on investment.

When Using the Payback Method to Determine Economic Feasibility of Projects,the