Page 255 - Microsoft Word - 00 ACCA F2 Prelims.docx
P. 255
Cappital budggeting
3.5 AAdvantagess and disaadvantagees of paybback
Simple too understaand. It is not a measuree of
absolutee profitability.
It is a simmple meassure of
risk Ignores the time vvalue of
money. (can use
Uses cassh flows raather discounnted cash fflows)
than acccounting prrofits
Does noot take acccount of
Helps avvoid liquiditty cash floows beyondd the
problemss. paybackk period.
249
