Which of the following statements is CORRECT?

a. The regular payback ignores cash flows beyond the payback period, but the discounted payback method overcomes this problem.

b. One drawback of the discounted payback is that this method does not consider the time value of money, while the regular payback overcomes this drawback.

c. The shorter a project's payback period, the less desirable the project is normally considered to be by this criterion.

d. If a project's payback is positive, then the project should be accepted because it must have a positive NPV.

e. One drawback of the payback criterion is that this method does not take account of cash flows beyond the payback period.

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Answer:

e. One drawback of the payback criterion is that this method does not take account of cash flows beyond the payback period.

Payback period is the time by which undiscounted cashflow cover the intial investment outlay

It just measures when the initial investment is recouped and doesnot take into account cash flows beyond

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