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Why do many corporations continue to use the payback period method? Which method do you prefer?...

  • Why do many corporations continue to use the payback period method?
  • Which method do you prefer? Explain why you prefer this method
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Answer #1

The payback period method is followed by many companies who are majorly concern about liquidity. If a company ha very little funds they will be focus on only projects which provide them return in less time. More over investing borrowed funds in projects which take long time for return wll result in payment of more interest.

I prefer payback period,because any organisation in concerned getting fast returns otherwise their funds will be blocked and we do not get funds for investing in any future best investment option.

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