Question

True or false: When a capital investment decision is being made between two or more alternatives, the project with the shortest payback period is always the most desirable investment.

Answer 1

Answer:

False

Explanation:

The payback period refers to the specific period of time that it is required to recover the amount invested and it is an important factor to take into account but the project with the shortest payback period is not necessarily the most desirable investment because other factors are also considered, for example, the expected profit and the conditions in the environment that may affect the assumptions made. Because of that, the answer is that the statement is false.