Disadvantages of the discounted payback decision rule

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Reference no: EM131188021

One of the common disadvantages of the discounted payback decision rule is that I may cause:

a) the most liquid projects to be rejected in favor of the less liquid projects.

b) some positive net present value projects to be rejected.

c) projects to be incorrectly accepted due to ignoring the time value of money

d) a firm to become more long-term focused.

e) some projects to be accepted which would otherwise be rejected under the payback rule.

Reference no: EM131188021

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