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    Payback period method

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    Assume a capital project requires $42,000 as an initial investment and expects a net cash inflow of $12,000 per year. The payback period method _________.

    would consider the capital project accepable if the company requires a minimum payback of three years, is usually used as a screening device to eliminate capital projects from further investigation, uses accounting net income rather than cash flows in the calculations, or compares the rate of return to the company's cost of capital

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    Is it an objective type question. If yes then the answer is
    "is usually used as a screening ...

    Solution Summary

    The expert examines payback periods methods for an initial investment.