The regular payback method is characterized by several flaws: the provision of the same weight for dollars that can be earned in different years; the cash flows that are not related to the closed payback year or received beyond that period are not taken into account; the payback method can only provide the information regarding the period when the investment can be returned. The discounted payback can address only the first flaw among the mentioned ones. According to the discounted payback method, it is important to refer to the time associated with cash flows. However, the other weaknesses are not addressed directly.
What are the potential flaws with the regular payback method? Does the discounted payback period method correct these flaws?
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Academic.Tips. (2022) 'What are the potential flaws with the regular payback method? Does the discounted payback period method correct these flaws'. 14 June.
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Academic.Tips. (2022, June 14). What are the potential flaws with the regular payback method? Does the discounted payback period method correct these flaws? https://academic.tips/question/what-are-the-potential-flaws-with-the-regular-payback-method-does-the-discounted-payback-period-method-correct-these-flaws/
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Academic.Tips. 2022. "What are the potential flaws with the regular payback method? Does the discounted payback period method correct these flaws?" June 14, 2022. https://academic.tips/question/what-are-the-potential-flaws-with-the-regular-payback-method-does-the-discounted-payback-period-method-correct-these-flaws/.
1. Academic.Tips. "What are the potential flaws with the regular payback method? Does the discounted payback period method correct these flaws?" June 14, 2022. https://academic.tips/question/what-are-the-potential-flaws-with-the-regular-payback-method-does-the-discounted-payback-period-method-correct-these-flaws/.
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Academic.Tips. "What are the potential flaws with the regular payback method? Does the discounted payback period method correct these flaws?" June 14, 2022. https://academic.tips/question/what-are-the-potential-flaws-with-the-regular-payback-method-does-the-discounted-payback-period-method-correct-these-flaws/.
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"What are the potential flaws with the regular payback method? Does the discounted payback period method correct these flaws?" Academic.Tips, 14 June 2022, academic.tips/question/what-are-the-potential-flaws-with-the-regular-payback-method-does-the-discounted-payback-period-method-correct-these-flaws/.
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