In considering the payback period, ____.
A) the maximum period allowed by a firm is a specific time period based on objective criteria
B) it considers the time value of money in determining the maximum allowable time period
C) it gives some indication of a project's desirability from a liquidity viewpoint
D) it is based on cash flows both during and after the payback period

Question

Quizplus · Accepted Answer

The payback period gives some indication of a project's desirability from a liquidity viewpoint. It measures the time required to recover the initial investment in a project. It does not consider the time value of money or cash flows after the payback period. The maximum period allowed by a firm is subjective and varies depending on the firm's policies and objectives.

In Considering the Payback Period, ____