Which of the following is an advantage of the payback period?
A)It is a simple technique.
B)Accounting records are generally not based on cash flow, so the information for the calculation is readily available.
C)Since depreciation is not included in the calculation, the result is not distorted.
D)It provides a clear indicator of when the investment will be recovered.

Question

Quizplus · Accepted Answer

The advantage of the payback period is that it is a simple technique that provides a clear indicator of when the investment will be recovered. While it may not take into account depreciation, and accounting records may not be based on cash flow, it is still a widely used method for evaluating the profitability of investments.

Which of the Following Is an Advantage of the Payback