Many firms today continue to use the payback method but also employ the NPV or IRR methods,especially when large projects are being analyzed.

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It is common for firms to use a combination of different capital budgeting methods, including payback, NPV, and IRR. While payback is a simple and intuitive method, it has limitations and does not account for the time value of money. In contrast, NPV and IRR take into account the cash flows over the project's entire life and are more comprehensive measures of profitability. Therefore, many firms use both payback and more sophisticated methods, particularly when evaluating larger investments with significant long-term implications.

Many Firms Today Continue to Use the Payback Method but Also