The primary disadvantage of the payback period is that:
A)it disregards the time value of money.
B)it is highly complex.
C)it does not allow the comparisons of alternatives.
D)it incorporates all cash flows that occur after the payback period.

Question

Quizplus · Accepted Answer

The primary disadvantage of the payback period is that it disregards the time value of money, which can lead to inaccurate financial analysis and decision-making. This means that the payback period fails to take into account the fact that money today is worth more than money in the future due to inflation and the potential to invest it and earn interest.

The Primary Disadvantage of the Payback Period Is That