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Which of the following is not a disadvantage of the payback period method of capital budgeting evaluation? answer choices It does not estimate the value added to the firm
Which of the following is not a disadvantage of the payback period method of capital budgeting evaluation?
answer choices
It does not estimate the value added to the firm.
It may reject (accept) positive (negative) NPV projects.
It ignores the cash that beyond the payback period.
It is straight forward and simple to compute.
Expert Solution
Answer-
The correct option is fourth option. It is straight forward and simple to compute.
It is not a disadvantage of payback period method of capital budgeting evaluation.
The options 1,2 and 3. are all disadvantages of payback period method of capital budgeting.
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