alleryStart learning →The principal advantage of the payback period method is its:
AUniformity
BSimplicity
CComplexity
DPopularity
Answer & Solution
Correct answer: B. Simplicity
1. The method asks only how long the money takes to come back.
2. No discounting and no rate estimate are needed.
3. The principal advantage of the payback period method is its simplicity.
4. So simplicity is the stated advantage.
_Source: OpenStax Principles of Finance (CC BY 4.0), Ch 16 'How Companies Think about Investing', sections 16.1-16.5_
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