Which one of the following methods of analysis has the greatest bias towards short-term projects?
A) Net present value
B) Internal rate of return
C) Average accounting return
D) Profitability index
E) Payback

Question

Quizplus · Accepted Answer

Payback method focuses solely on the time it takes to recoup the initial investment and does not take into account cash flows beyond that point, resulting in a bias towards short-term projects. The other methods consider cash flows over the entire life of the project and are less biased towards short-term projects.

Which One of the Following Methods of Analysis Has the Greatest