The advantages of the payback method of project analysis include the: I.application of a discount rate to each separate cash ﬂow.
II)bias towards liquidity.
III)ease of use.
IV)arbitrary cut-off point.

Question

Quizplus · Accepted Answer

II and III are correct because the payback method is favored for its simplicity and its focus on liquidity, highlighting how quickly an investment can be recouped. It does not involve discounting cash flows (eliminating I) and the cut-off point is indeed arbitrary but generally considered a disadvantage, not an advantage (eliminating IV).

The Advantages of the Payback Method of Project Analysis Include