The payback method is criticized on the grounds that it
A) ignores obsolescence factors.
B) ignores the cost of an investment.
C) is complicated to use.
D) ignores the time value of money.

Question

Quizplus · Accepted Answer

The payback method ignores the time value of money, which means it does not consider the fact that money received in the future may be worth less than money received today due to inflation or the opportunity cost of alternative investments. As a result, it may not accurately reflect the true profitability or long-term value of an investment.

The Payback Method Is Criticized on the Grounds That It