The Refinancing Decision Is Sometimes Oversimplified into a Few "Rules

Multiple Choice

The refinancing decision is sometimes oversimplified into a few "rules of thumb" that a borrower uses in order to gauge its potential benefits. Which of the following methodologies is criticized for its inability to account for a variation in refinancing benefits due to cost or holding period differences?

A) Payback period approach
B) Net benefit approach
C) Interest rate spread
D) Net present value approach