Question: If the payback was the only method a firm used to accept or reject projects, what payback should it choose as the cutoff point, that

If the payback was the only method a firm used to accept or reject projects, what payback

should it choose as the cutoff point, that is, reject projects if their paybacks are not below

the chosen cutoff?

Is your selected cutoff based on some economic criteria, or is it more or less arbitrary?

Are the cutoff criteria equally arbitrary when firms use the NPV and/or the IRR as the criteria? Explain please.

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