The basic premise of the payback method is that the more quickly the cost of an investment is recovered the more desirable is the investment.

Question

Quizplus · Accepted Answer

The statement accurately describes the basic premise of the payback method. The payback method is a capital budgeting technique which involves calculating the length of time required to recover the cost of an investment in terms of cash inflows. The shorter the payback period, the more desirable the investment is considered to be, as it demonstrates a quicker return on investment.

The Basic Premise of the Payback Method Is That the More