Which of the following is False concerning the Payback method of capital budgeting?
A) It uses the accrual accounting rate of return.
B) The payback method highlights liquidity.
C) Its major strength is that it that it is easy to use.
D) It does not project cash flows after the recovery of the initial investment.
E) Shorter payback periods give an organization more flexibility.

Question

Quizplus · Accepted Answer

The Payback method does not use the accrual accounting rate of return. It focuses on the time it takes to recover the initial investment in a project by analyzing the cash inflows and outflows.

Which of the Following Is False Concerning the Payback Method