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

Question

Quizplus · Accepted Answer

The payback period approach only looks at the time it takes for the initial investment to be recovered; it does not take into account any cash flows that occur beyond this period, which could result in a failure to fully evaluate the profitability of a project.

One Weakness of the Payback Period Approach Is Its Failure