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The first shortcoming of the payback method is that it ignores the:
ATrade value of goods
BTerm value of loans
CTime value of money
DTotal value of stock
Answer & Solution
Correct answer: C. Time value of money
1. All future rupees are treated alike.
2. Waiting is not penalised.
3. It ignores the time value of money.
_Source: OpenStax Principles of Finance 2e, Chapter 16, How Companies Think about Investing._
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