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Sagot :
In contrast to other capital budgeting strategies, the payback period disregards the time value of money (TVM). The correct option is (d).
What is Payback period?
The cash payback period is determined by dividing the original investment by the average net yearly cash flows; the present value (or time value) of anticipated cash flows is not taken into consideration.
The term "payback time" refers to the amount of years needed to recoup the initial monetary outlay. It is, in other words, the length of time that a machine, facility, or other investment has generated enough net income to pay its investment expenses. The calculating technique is really just a matter of dividing the original investment's cost by the annual cash flows.
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