Amajor disadvantage of the payback period method is that it select one: a. is useless as a risk indicator. b. ignores cash flows beyond the payback period. c. does not directly account for the time value of money. d. all of the answers above are correct. e. only answers b and c are correct.

e. Only answers b and c are correct.

Explanation:

Payback period is used to calculate the time period in which the cost of the project will be recovered fully.

It clearly depicts the risk associated with the project as if cost of project not recovered during life of project it depicts project is riskier and shall not be accepted.

Yes, it does not consider cash flows arising after payback period is over.

Payback period generally do not considers, time value of money as it is calculated simply without discounting the cash flows.

Therefore, only statements b and c are correct.

Correct Option

e. Only answers b and c are correct.

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