Which of the following statements correctly describes a weakness associated with the financial project selection model?
A) The benefit-to-cost models favor projects which generate the smallest absolute return over a specified period.
B) Payback period models do not consider the profit to be realized after the costs are paid.
C) The Net Present Value (NPV) method does not consider the time value of money.
D) The Internal Rate of Return (IRR) method is difficult to use when a project has conventional cash flows.

Question

Which of the following statements correctly describes a weakness associated with the financial project selection model?​ 
A) The benefit-to-cost models favor projects which generate the smallest absolute return over a specified period. 
B) Payback period models do not consider the profit to be realized after the costs are paid. 
C) The Net Present Value (NPV) method does not consider the time value of money. 
D) The Internal Rate of Return (IRR) method is difficult to use when a project has conventional cash flows.

Quizplus · Accepted Answer

The payback period model focuses on how quickly an investment can be recouped and does not account for any profits that occur after the initial investment has been recovered. This can lead to overlooking projects that have significant long-term benefits.

Which of the Following Statements Correctly Describes a Weakness Associated