Use the information for the question(s)below.

-If WiseGuy Ltd uses the payback period rule to choose projects, which of the projects (Project A or Project B)will rank highest?

A)Project A
B)Project B
C)Project A and Project B have the same ranking.
D)Cannot calculate a payback period without a discount rate.

Question

Use the information for the question(s)below.
 
-If WiseGuy Ltd uses the payback period rule to choose projects, which of the projects (Project A or Project  B)will rank highest?

A)Project A 
B)Project B 
C)Project A and Project B have the same ranking. 
D)Cannot calculate a payback period without a discount rate.

Quizplus · Accepted Answer

The payback period rule ranks projects based on how quickly the initial investment is recovered. Without additional information, such as cash flows or initial investment amounts, we assume Project A has a shorter payback period than Project B.

Use the Information for the Question(s)below