The Payback Method

Multiple Choice

The payback method:

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 equal to the point where all initial capital investments have been fully depreciated.
C) requires an arbitrary choice of a cutoff point.
D) varies the cutoff point with the market rate of interest.
E) is irrelevant to the accept/reject decision.