Which two methods of project analysis are the most biased towards short-term projects?
A)net present value and internal rate of return
B)internal rate of return and profitability index
C)payback and discounted payback
D)net present value and discounted payback
E)discounted payback and profitability index

Question

Quizplus · Accepted Answer

Payback and discounted payback are the two methods of project analysis that are biased towards short-term projects. This is because they only consider the time taken to recoup the initial investment, without considering the cash flows beyond that point. Other methods such as net present value and internal rate of return take into account the entire life cycle of the project, and thus are less biased towards short-term projects.

Which Two Methods of Project Analysis Are the Most Biased