Business, 08.11.2019 02:31, natalie407888

Suppose a firm relies exclusively on the payback method when making capital budgeting decisions, and it sets a 4-year payback regardless of economic conditions. other things held constant, which of the following statements is most likely to be true? a. it will accept too many long-term projects and reject too many short-term projects (as judged by the npv).b. the firm will accept too many projects in all economic states because a 4-year payback is too low. c. the firm will accept too few projects in all economic states because a 4-year payback is too high. d. if the 4-year payback results in accepting just the right set of projects under average economic conditions, then this payback will result in too few long-term projects when the economy is weak. e. it will accept too many short-term projects and reject too many long-term projects (as judged by the npv).

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Suppose a firm relies exclusively on the payback method when making capital budgeting decisions, and...