1. The disadvantages of the simple payback approach include:

cash flows after the payback period are ignored in the calculation

payback ignores the time value of money

payback fails to provide an objective decision-making criterion

all of the above

2. A project requires a net investment of $500,000. It has a profitability index of 1.5 based on the firm's 12 percent cost of capital. Determine the net present value of the project.

$ 250,000

$ 562,500

$1,012,500

$ 140,625