Question: A characteristic of the payback method is that it Multiple Choice Uses the estimated life of the asset in the denominator of the calculation. Neglects

A characteristic of the payback method is that it

Multiple Choice

  • Uses the estimated life of the asset in the denominator of the calculation.
  • Neglects total project profitability (i.e., profitability over the entire life of the project).
  • Uses accrual accounting numbers in the numerator of the calculation.
  • Uses the hurdle (i.e., discount) rate in the calculation.
  • Cannot incorporate into the calculation the time value of money.

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