The Payback Period Rule

Multiple Choice

The payback period rule:

A) determines a cutoff point so that all projects accepted by the NPV rule will be accepted by
the payback period rule.
B) determines a cutoff point so that depreciation is just equal to positive cash flows in the
payback year.
C) requires an arbitrary choice of a cutoff point.
D) varies the cutoff point with the interest rate.
E) requires two cut-off points to control cash flows in each period.