Multiple choice

Directions: Choose the correct option for the given question: Pay-back method takes into account the cash flows after the pay-back period.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The payback period method focuses exclusively on the time required to recover the initial investment. It ignores all cash flows occurring after that point, which is a major limitation of the method.

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