All of the following are weaknesses of the payback period EXCEPT
A) a disregard for cash flows after the payback period.
B) only an implicit consideration of the timing of cash flows.
C) the difficulty of specifying the appropriate payback period.
D) it uses cash flows, not accounting profits.

Question

Quizplus · Accepted Answer

This statement is incorrect; it is not a weakness of the payback period. Using cash flows instead of accounting profits is actually a strength of the payback period because it focuses on the actual cash inflows and outflows of a project rather than non-cash accounting measures. The other options listed are weaknesses of the payback period.

All of the Following Are Weaknesses of the Payback Period