The payback period may be more appropriate to use for companies experiencing capital rationing.

Name: The payback period may be more appropriate to use for companies experiencing capital rationing.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The payback period is a good measure to use for companies experiencing capital rationing, as it compares the time it takes to recover the investment with the company's capital constraints. This helps the company identify which projects are worth investing in based on their quicker return on investment.

The Payback Period May Be More Appropriate to Use for Companies