In which one of the following situations would the payback method be the preferred method of analysis?
A)A project that can easily be expanded
B)Two mutually exclusive projects
C)A proposed expansion of a firm's current operations
D)Different-sized projects
E)Investment funds available only for a limited period of time

Question

Quizplus · Accepted Answer

The payback method would be preferred in a situation where investment funds are available for only a limited period of time because this method focuses on the length of time it takes for the project's cash flows to recoup the initial investment. This allows investors to quickly determine if the project is worth pursuing given their limitations in time.

In Which One of the Following Situations Would the Payback