Discussion
Payback period is nonetheless widely used because it measures
Answer: C
Correct answer: how long capital is at risk
Payback is a crude measure of liquidity and exposure, and that is a genuine concern - particularly in an unstable market or a politically uncertain country, where a project recovering its cost in two years is safer than one taking eight regardless of what the present worths say. Used as a supplementary screen it is defensible; used alone it is not.
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