Question

Using the payback period rule will bias toward accepting which type of investment?

Multiple choice question.

Short-term investment


Long-term investment

Answer 1

Using the payback period rule will bias toward accepting **short-term investments**. This is because the payback period method focuses on how quickly an investment can return its initial cost, thus favoring investments that generate cash flows quickly over those that may generate higher returns in the long term but take longer to pay back.