Question

A significant advantage of the payback period is that it Group of answer choices tends to reduce firm risk because it favors projects that generate early, less uncertain returns. places emphasis on time value of money. allows for the proper ranking of projects.

Answer 1

tends to reduce firm risk because it favors projects that generate

Step-by-step explanation:

Payback period as well as capital budgeting is concerned can be regarded as the required time that the funds that was expended on a particular investment is been recouped. It could also be the time to get to break-even point. Instance of this is $1200 investment which was invested at the beginning of 1st year which give a return of $400 towards the end of 1st year as well as 2nd year can be regarded to have two years of payback period. It should be noted that the A significant advantage of the payback period is that it tends to reduce firm risk because it favors projects that generate