A weakness of the payback period is that it disregards:
A)Projects with shorter payback periods
B)Cash flows during the payback period
C)Start-up costs
D)The time value of money

Question

Quizplus · Accepted Answer

The payback period does not take into account the time value of money, which means it does not consider the fact that money today is worth more than the same amount of money in the future due to inflation and other economic factors. This is a major weakness of the payback period as it can lead to inaccurate decision making.

A Weakness of the Payback Period Is That It Disregards