The payback method is consistent with the goal of shareholder wealth maximisation.

Question

Quizplus · Accepted Answer

The payback method is not consistent with the goal of shareholder wealth maximisation as it only measures the time it takes for a project to recover its initial investment and does not take into account the time value of money or the long-term profitability of the project. Shareholder wealth maximisation aims to maximize the present value of future cash flows to shareholders, and the payback method does not consider this.

The Payback Method Is Consistent with the Goal of Shareholder