Which of the following methods of project analysis are biased towards short-term projects?
A)Profitability index and internal rate of return
B)Discounted payback and payback
C)Net present value and payback
D)Payback and profitability index
E)Profitability index and discounted payback

Question

Quizplus · Accepted Answer

Both discounted payback and payback rely only on the time it takes to recover the initial investment, making them biased towards short-term projects as they do not take into account the cash flows beyond the payback period. The other options consider the time value of money and future cash flows, making them more suitable for long-term project analysis.

Which of the Following Methods of Project Analysis Are Biased