The discounted payback rule may cause:
A)projects with discounted payback periods in excess of the project's life to be accepted.
B)the most liquid projects to be rejected in favor of less liquid projects.
C)projects to be incorrectly accepted due to ignoring the time value of money.
D)some projects with negative net present values to be accepted.
E)some positive net present value projects to be rejected.

Question

Quizplus · Accepted Answer

The discounted payback rule may reject projects that have a positive net present value because it focuses on the time it takes to recover the initial investment, potentially ignoring the full profitability of the project beyond the payback period.

The Discounted Payback Rule May Cause