As per the payback period method, a project is acceptable to a firm if _____.

Question

Quizplus · Accepted Answer

The payback period method suggests that a project is acceptable to a firm if the payback period is less than the maximum cost-recovery time established by the firm. In other words, the firm sets a maximum time frame for when it wants to recover its initial investment, and if the payback period is less than that, the project is deemed acceptable. This method is often used by firms that prioritize short-term liquidity and cash flow over long-term profitability.

As Per the Payback Period Method, a Project Is Acceptable