The payback method:
A) Entails difficult computations.
B) Is prejudiced towards short-term projects.
C) Always applies a ten year cut-off point for cash flows.
D) Adjusts for the risk level inherent in a project.
E) Is generally used only for large projects.

Question

Quizplus · Accepted Answer

The payback method is biased towards short-term projects because it focuses on how quickly the initial investment can be recovered, without considering the cash flows that occur after the payback period.

The Payback Method