Payback is frequently used to analyze independent projects because:
A) it considers the time value of money.
B) all relevant cash flows are included in the analysis.
C) it is easy and quick to calculate.
D) it is the most desirable of all the available analytical methods from a financial perspective.

Question

Quizplus · Accepted Answer

The payback period is favored for its simplicity and speed in calculation, making it an easy and quick method to estimate how long it will take for an investment to "pay back" its initial cost. It does not, however, account for the time value of money or ensure that all relevant cash flows are considered, nor is it the most financially comprehensive method available.

Payback Is Frequently Used to Analyze Independent Projects Because