Which of the following is correct about the payback method?
A) It considers only the cash flows that occur during the payback period.
B) It considers an asset's profitability.
C) It is normally the only method used when deciding whether to invest in an asset.
D) It is difficult to calculate.

Question

Quizplus · Accepted Answer

The payback method only considers the cash flows that occur during the payback period. It does not take into account the profitability of the asset or any cash flows that occur after the payback period. It is a simple method but may not provide a complete picture of the investment's potential profitability.

Which of the Following Is Correct About the Payback Method