Which of the following best explains the continuing popularity of the payback method?
A) Mathematical simplicity and some insight into the riskiness of cash flows.
B) Uses all cash flows and takes into account the time value of money.
C) Reliably selects the projects that add most value to the firm.
D) It provides objective selection criteria and is taught as the primary method in most business schools.

Question

Quizplus · Accepted Answer

The continuing popularity of the payback method can be attributed to its mathematical simplicity and its ability to provide some insight into the riskiness of cash flows. While it does not take into account the time value of money or reliably select the projects that add most value to the firm, the payback method is often taught as a primary method in business schools and can provide objective selection criteria for certain types of projects.

Which of the Following Best Explains the Continuing Popularity of the Payback