Which methods of project analysis are most biased towards short-term projects?
A)Net present value and internal rate of return
B)Payback and discounted payback
C)Accounting rate of return and internal rate of return
D)Payback and accounting rate of return
E)Internal rate of return and discounted payback

Question

Quizplus · Accepted Answer

Payback and discounted payback methods are most biased towards short-term projects as they only focus on the amount of time it takes to recoup the initial investment. They do not take into account the time value of money or the overall profitability of the project in the long term. Therefore, these methods are not suitable for evaluating long-term projects or projects with complex cash flows.

Which Methods of Project Analysis Are Most Biased Towards Short-Term