Regular payback method
Four of the following statements are truly disadvantages of the regular payback method, but one is not a disadvantage of this method. Which one is NOT
a disadvantage of the payback method?
Answer
Lacks an objective, market-determined benchmark for making decisions.
Ignores cash flows beyond the payback period.
Does not directly account for the time value of money.
Does not provide any indication regarding a project’s liquidity or risk.
Does not take account of differences in size among projects.
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