Question

hich one of the following statements is correct? Question 13 options: A longer payback period is preferred over a shorter payback period. The payback rule states that you should accept a project if the payback period is less than one year. The payback period ignores the time value of money. The payback rule is biased in favor of long-term projects. The payback period considers the timing and amount of all of a project's cash flows.

Answer 1

Answer:

The payback period ignores the time value of money.

Explanation:

The Payback period calculates the amount of time it takes to recover the amount invested in a project from its cumulative cash flows.

The shorter the payback period, the more desirable a project is.

The company determines the maximum pay back period, it can be a year or more than a year of even less.

The Payback period doesn't account for the time value of money. The discounted playback period corrects for this limitation.

The Payback period method ignores cash flows after the payback period has been reached.

I hope my answer helps you