Answered

Which of the following statements is NOT a disadvantage of the regular payback method?

a. Ignores cash flows beyond the payback period.
b. Does not directly account for the time value of money.
c. Does not provide any indication regarding a project's liquidity or risk.
d. Does not take account of differences in size among projects.
e. Lacks an objective, market-determined benchmark for making decisions.

Answer :

ahmedgodtrust

Answer:

Does not provide any indication regarding a project's liquidity or risk.

The correct answer is C

Explanation:

Payback period is used for measuring the liquidity of a project. It is also used for screening projects where a company is facing liquidity problem. All the options are disadvantages of regular payback period with the exception of option C.

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