Which of the following methods of project analysis are biased towards short-term projects?
I. Internal rate of return
II. Net present value
III. Payback
IV. Discounted payback
A) I and II only
B) III and IV only
C) II and III only
D) I and IV only
E) II and IV only

Question

Quizplus · Accepted Answer

Payback and discounted payback methods are biased towards short-term projects as they focus on how quickly the project can generate cash flows to recover its initial investment. Internal rate of return and net present value take into consideration the time value of money and the entire project life, making them better suited for evaluating long-term projects.

Which of the Following Methods of Project Analysis Are Biased