Four of the following statements are truly disadvantages of the regular payback method, but one is not a disadvantage of this method. Which one is NOT a disadvantage of the payback method?
A) Lacks an objective, market-determined benchmark for making decisions.
B) Ignores cash flows beyond the payback period.
C) Does not directly account for the time value of money.
D) Does not provide any indication regarding a project's liquidity or risk.

Question

Quizplus · Accepted Answer

Option D is not a disadvantage of the payback method. In fact, the payback period is used to measure the liquidity of a project, representing the amount of time it takes to recover the investment made in the project. However, it does not provide any indication regarding the risk of the project, making options A, B, and C true disadvantages of the payback method.

Four of the Following Statements Are Truly Disadvantages of the Regular