The payback period rule:
A)varies the cut-off point with the interest rate.
B)determines a cut-off point so that all projects accepted by the NPV rule will be accepted by the payback period rule.
C)requires an arbitrary choice of a cut-off point.
D)both A and C.

Question

Quizplus · Accepted Answer

The payback period rule requires an arbitrary choice of a cut-off point, as it does not inherently account for the time value of money or interest rates.

The Payback Period Rule