Which of the following statements is CORRECT?
A) The shorter a project's payback period,the less desirable the project is normally considered to be by this criterion.
B) One drawback of the payback criterion is that this method does not take account of cash flows beyond the payback period.
C) If a project's payback is positive,then the project should be accepted because it must have a positive NPV.
D) The regular payback ignores cash flows beyond the payback period,but the discounted payback method overcomes this problem.
E) One drawback of the discounted payback is that this method does not consider the time value of money,while the regular payback overcomes this drawback.

Question

Quizplus · Accepted Answer

The payback period method only considers cash inflows up to the time it takes to recover the initial investment, so it does not account for cash flows occurring after the payback period. This is a drawback of the payback method.

Which of the Following Statements Is CORRECT