Which of the following statements concerning payback analysis is true?

Question

Quizplus · Accepted Answer

All the statements provided are true regarding payback analysis. A) Investments with shorter paybacks are generally preferred because they allow for quicker recovery of the initial investment. B) The payback method does indeed ignore the time value of money, as it does not discount future cash flows. C) The payback method and the unadjusted rate of return method are different; the former focuses on the time it takes to recover the initial investment, while the latter looks at the average annual profit of the investment, leading to potentially different conclusions about an investment's attractiveness.

Which of the Following Statements Concerning Payback Analysis Is True