The payback method is only useful when the expected cash flows in the later years of the project are highly uncertain.

Question

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The payback method is useful when cash flows are certain and can be predicted with some accuracy. It is a simple method that calculates the time it takes for a project to generate enough cash flows to recover its initial investment. However, it does not take into account the time value of money, and it ignores cash flows that occur after the payback period. Therefore, it may not be the best method to use when cash flows in later years are uncertain, as it does not provide a complete picture of a project's profitability over time.

The Payback Method Is Only Useful When the Expected Cash