The payback period provides information to managers that can be used to help

Question

Quizplus · Accepted Answer

The payback period provides information on the time taken to recover the initial investment and, as such, helps control the risks associated with the uncertainty of future cash flows, minimize the impact of an investment on a firm's liquidity, control the risk of obsolescence, and control the effect of the investment on performance measures. Therefore, all of these are valid reasons for managers to use the payback period as a tool for decision-making.

The Payback Period Provides Information to Managers That Can Be