Which of the following is not a characteristic of the payback method for making capital budgeting decisions?
A) It is easy to calculate and comprehend.
B) It focuses primarily on liquidity, rather than profitability, of an investment project.
C) It can be considered a rough measure of risk.
D) It considers returns over the entire life of the project.
E) It requires estimates of after-tax cash inflows and after-tax cash outflows.

Question

Quizplus · Accepted Answer

The payback method does not consider returns over the entire life of the project; it only considers the time it takes to recoup the initial investment.

Which of the Following Is Not a Characteristic of the Payback