Which of the following is NOT a true statement?
A) The payback rule ignores the time value of money.
B) The discounted payback rule requires a cutoff hurdle be set.
C) The profitability index is closely related to the payback period.
D) The AAR is based on accounting data.
E) There may be multiple IRRs for an independent project.

Question

Quizplus · Accepted Answer

The profitability index is not closely related to the payback period; instead, it is related to the net present value (NPV) method, as it is calculated by dividing the present value of future cash flows by the initial investment.

Which of the Following Is NOT a True Statement