For any project to be accepted in a capital budget, the project's payback period must be less than the maximum acceptable payback period set by the organization.

Question

Quizplus · Accepted Answer

This statement is true. Many organizations set a maximum acceptable payback period as one of their criteria for selecting projects to be included in their capital budget. The payback period is the time it takes for a project to generate cash inflows equal to the initial investment. If a project's payback period exceeds the maximum acceptable limit, it may be rejected or revised to meet the criteria.

For Any Project to Be Accepted in a Capital Budget