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 focus solely on the length of time it takes to recover the initial investment, which is biased towards short-term projects. Internal rate of return and net present value take into consideration the timing and magnitude of cash flows, which is not biased towards any specific project length.

Which of the Following Methods of Project Analysis Are Biased