The regular payback method has a number of disadvantages, some of which are listed below. Which of these items is NOT a disadvantage of this method?
A) lack of an objective, market-determined benchmark for making decisions
B) ignores cash flows beyond the payback period
C) does not directly account for the time value of money
D) does not provide any indication regarding a project's liquidity

Question

Quizplus · Accepted Answer

All of the other items listed are disadvantages of the regular payback method, but D is not. The regular payback method can provide an indication of a project's liquidity, as it shows how quickly the initial investment will be recouped.

The Regular Payback Method Has a Number of Disadvantages, Some