1) what is the payback method? 

2) strengths of the payback method?

3) weaknesses of the payback method?

 

Answer:

1.

The payback method measures the time it will take to recoup, in the form of expected future net cash inflows, the net initial investment in a project. .

2.

The payback method is simple and easy to understand. It is a handy method when screening many proposals and particularly when predicted cash flows in later years are highly uncertain

3.

its neglect of the time value of money and of the cash flows after the payback period. The first drawback, but not the second, can be addressed by using the discounted payback method.