From a Finance Perspective, Discounted Payback Is Considered to Be

question 162

Multiple Choice

From a finance perspective, discounted payback is considered to be a superior method of analysis as compared to payback. Why then, is discounted payback used less frequently than payback?

• A) Discounted payback applies only to long-term projects.
• B) Discounted payback is more difficult to compute and explain.
• C) Discounted payback is based on net income rather than cash flows.
• D) Discounted payback requires knowledge of a project's internal rate of return.
• E) Discounted payback is liquidity biased where payback is not.