Which of the following statements is true regarding the payback period?
A) the time value of money is considered when calculating the payback.
B) the payback analysis is more accurate than the net present value analysis.
C) the payback period is less accurate than the accounting rate of return.
D)the time value of money is not considered when calculating the payback.

Question

Quizplus · Accepted Answer

Payback period does not consider the time value of money, meaning future cash flows are not discounted to their present value. Therefore, statement D is true. Statements A, B, and C are all incorrect.

Which of the Following Statements Is True Regarding the Payback