project’s payback
Which of the following statements is CORRECT?
Answer
The shorter a project’s payback period, the less desirable the project is normally considered to be by this criterion.
One drawback of the regular payback is that this method does not take account of cash flows beyond the payback period.
If a project’s payback is positive, then the project should be accepted because it must have a positive NPV.
The regular payback ignores cash flows beyond the payback period, but the discounted payback method overcomes this problem.
One drawback of the discounted payback is that this method does not consider the time value of money, while the regular payback overcomes this drawback.
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