One disadvantage of the payback method is that it does not consider the time value of money.

Question

Quizplus · Accepted Answer

The payback method only focuses on the time taken to recover the initial investment and does not take into account the opportunity cost of the money over time. This means that it ignores the fact that money today is worth more than the same amount of money in the future due to inflation or the potential earning power of the money if invested elsewhere.

One Disadvantage of the Payback Method Is That It Does