Projects with shorter paybacks always generate more cash flows.

Question

Quizplus · Accepted Answer

This statement is false. Projects with shorter paybacks may generate higher cash flows in the short term, but longer payback projects may generate higher cash flows over the entire project lifespan. The payback period does not provide a complete picture of a project's profitability. It is important to consider other factors such as net present value and internal rate of return when evaluating project cash flows.

Projects with Shorter Paybacks Always Generate More Cash Flows