Which of the following statements is NOT a disadvantage of the regular payback method?
A) Ignores cash flows beyond the payback period.
B) Does not directly account for the time value of money.
C) Does not provide any indication regarding a project's liquidity or risk.
D) Does not take account of differences in size among projects.
E) Lacks an objective, market-determined benchmark for making decisions.

Question

Quizplus · Accepted Answer

The regular payback method does not provide any indication regarding a project's liquidity or risk, but this is not a disadvantage of the method. The regular payback method has other disadvantages, such as ignoring cash flows beyond the payback period and not directly accounting for the time value of money. It also does not take account of differences in size among projects, and lacks an objective, market-determined benchmark for making decisions.

Which of the Following Statements Is NOT a Disadvantage of the Regular