Which capital investment evaluation technique is described by the following characteristics? (1) Easy to understand; (2) Biased towards liquidity; (3) Requires an arbitrary cutoff point; (4) Ignores the time
Value of money.
A) NPV
B) IRR
C) Proﬁtability index
D) Payback period
E) Discounted payback

Question

Quizplus · Accepted Answer

The characteristics described fit the payback period evaluation technique. It is easy to understand, biased towards liquidity, requires an arbitrary cutoff point, and ignores the time value of money.

Which Capital Investment Evaluation Technique Is Described by the Following