The payback method is a screening device and is rarely used as the sole method for deciding whether to invest in an asset.

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The payback method is a simple technique that calculates the time required for an investment to recover its initial cost, and it is generally used as a preliminary screening tool for investment decisions. It does not consider the time value of money, and it may result in incorrect decisions if used as the sole investment criterion. Therefore, it is typically supplemented by other methods, such as net present value (NPV) or internal rate of return (IRR).

The Payback Method Is a Screening Device and Is Rarely