General Studies · Investment Appraisal
What is the primary drawback of using the discounted payback period method for project appraisal?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1It ignores all cash flows that occur after the payback period is achieved.✓
- 2It cannot handle project-specific risk-adjusted discount rates.
- 3It is highly complex and difficult to calculate compared to IRR.
- 4It ignores the time value of money completely.
Correct answer
It ignores all cash flows that occur after the payback period is achieved.
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