One weakness of payback is its failure to recognize cash flows that occur after the payback period.

Name: One weakness of payback is its failure to recognize cash flows that occur after the payback period.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Payback only considers the cash flows within the payback period and does not take into account any cash flows that occur after that period. Therefore, it fails to recognize the long-term profitability of a project.

One Weakness of Payback Is Its Failure to Recognize Cash