Which of the following is not considered to be an advantage associated with the payback evaluation technique?
A)It is helpful in assessing future liquidity if a firm has limited capital resources.
B)It takes time value of money into consideration.
C)It is simple to calculate and understand.
D)All of the above are advantages of the payback evaluation technique.

Question

Quizplus · Accepted Answer

The payback evaluation technique does not take the time value of money into consideration, which means it does not adjust for the fact that receiving cash flows sooner is more valuable than receiving them later due to the potential for investment and earning interest. The other options are advantages of the payback evaluation technique. The payback evaluation technique does not take time value of money into consideration, making it less accurate compared to other evaluation methods that do consider the time value of money. Options A and C are advantages of the payback evaluation technique. Therefore, the correct answer is B.

Which of the Following Is Not Considered to Be an Advantage