A significant disadvantage of the payback period is that it:a. does no

QUESTION

A significant disadvantage of the payback period is that it:a. does not properly consider the time value of moneyb. is complicated to explainc. increases firm riskd. provides a measure of liquidity
Payback period is time
required to recover the cost of initial investment. Disadvantages of payback
period are:- a)
Time value
of money is not taken into account while calculating it. b)
Cash flows
generated after payback period are not considered. So it cannot be taken as a
true

easure of profitability. Hence
we can say that a significant disadvantage of the payback period is that it does
not properly consider the time value of money. So option a is correct
answer

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