Answer to Question #13103 in Management for Tiarra Jefferson

Question

Suppose a firm relies exclusively on the payback method when making capital budgeting decisons, and it sets a 4-year payback regardless of econimoce conditionsl Othier things held constant which of the following statements is most likely to be true?

Answer 1

E-If the 4-year payback results in accepting just the right set of projects under average economic conditions, and then this payback will result in too few long-term projects when the economy is weak.