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1. What is the major shortcoming of using the payback period as the only criterion in making capital budgeting decisions? 2. Discounting cash flows takes

1. What is the major shortcoming of using the payback period as the only criterion in making capital budgeting decisions?

2. Discounting cash flows takes into consideration on characteristic of the earnings stream that is ignored in the computation of return on average investment. What is this characteristic and why is it important?

3. What can be said about an investment proposal that has a net present value of zero?

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