If a project's payback period is less than the maximum acceptable payback period, we would accept it.

Question

Quizplus · Accepted Answer

This statement is true. The payback period is the amount of time it takes for a project to generate enough cash inflows to recover the initial investment. The maximum acceptable payback period is determined by the organization's policies and can vary depending on factors such as the project's riskiness, cost of capital, and strategic importance. If a project's payback period is less than the maximum acceptable payback period, it means that the project will generate enough cash inflows in a shorter time than the organization's policy allows. Therefore, the project will be accepted.

If a Project's Payback Period Is Less Than the Maximum