The drawback of the __________ model is that it fails to consider cash flows obtained once the initial investment has been recovered.
A)payback period
B)average rate of return
C)discounted cash flow
D)profitability index

Question

Quizplus · Accepted Answer

The payback period model only considers the time it takes for the initial investment to be recovered, without taking into account the cash flows generated after that point. The other models listed (B, C, and D) all take into account cash flows over the lifespan of the investment.

The Drawback of the __________ Model Is That It Fails